This Beloved Chain Is in Danger of "Imminent Collapse"
This popular store is on the brink of bankruptcy, with 15,000 jobs believed to be at risk.
The coronavirus has ravished retail businesses around the globe and even those that were once some of the most popular are falling prey to the current economic stresses. The latest news is tough for many millennials to grapple with: The British retail empire behind Topshop is on the brink of going into bankruptcy, with 15,000 jobs believed to be at risk. Topshop's parent company, Arcadia Group, which is owned by retail billionaire Sir Philip Green, is understood to be appointing administrators as early as this week after emergency talks to secure a $39.9 million loan were unsuccessful.
"The forced closure of our stores for sustained periods as a result of the COVID-19 pandemic has had a material impact on trading across our businesses," Arcadia said in a statement to Sky News. "As a result, the Arcadia boards have been working on a number of contingency options to secure the future of the Group's brands."
It has been a bruising few years for Arcadia. All 11 U.S. branches of Topshop were closed in June 2019, although the brand—and its counterpart, Topman—remained available online and through Nordstrom. Additionally, 500 jobs were cut from the group's head offices earlier this year, key locations in London were put up for sale to generate cash, and top staff members' wages were slashed by up to 50 percent.
Retail conditions in the U.K. have been harsh throughout 2020—figures from the Office for National Statistics suggest that clothing and fuel are the two sectors that have failed to recover to pre-pandemic levels. Industry analysts suggests that Arcadia's problems were worsened by poor online offerings as an increasing amount of the market has moved online. The next step for Arcadia would be to move into administration, the U.K.'s equivalent of Chapter 11 bankruptcy protection.
Topshop has been a major presence in fashion over the last 20 years, collaborating with celebrities from Kate Moss to Beyoncé to Kendall and Kylie Jenner, as well as sponsoring London Fashion Week. If the worst happens, there will be sizable repercussions throughout the fashion industry.
"Arcadia's imminent collapse could be a mortal blow to many of its suppliers already made vulnerable by the effects of COVID on its other customers," Tim Symes, a partner at litigation firm Stewarts, said in an interview with Internet Retailing. "Expect more insolvencies to follow."
On Nov. 30, rumors cropped up that Frasers Group—the retail conglomerate owned by billionaire businessman Mike Ashley—offered Arcadia an emergency loan of up to $67 million. "We understand that you believe that this is sufficient to allow the group to overcome its current short-term cash flow difficulties," Ashley wrote in a letter to Green, according to Footwear News. If Arcadia files for administration, Ashley indicated that Frasers would participate in a possible sale process and consider acquiring the company.
It remains to be seen what will become of Topshop and Arcadia's other brands—Dorothy Perkins, Miss Selfridges, Outfit, Wallis, and Burton—but it's hardly the only company that's struggling. Read on for more stores that could be disappearing and for the latest news, check out This Beloved Brand Is Closing All But 2 of Its U.S. Stores.
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The Children's Place
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After seeing sales drop 29 percent in the second quarter of 2020, Francesca's announced on Nov. 16 that it would be closing 140 of its stores. While many of Francesca's 560 brick-and-mortar locations will stay open, the company said in a statement that bankruptcy protection is on the table if sales don't improve. And for more retail news delivered straight to your inbox, sign up for our daily newsletter.
The music industry has grinded to a halt due to the COVID pandemic, with massive concerts on hold and even local chorus practices canceled. And now, one of the most iconic music stores is in jeopardy. Guitar Center, the largest U.S. retailer of musical instruments and equipment, announced on Nov. 13 that it will be filing for bankruptcy. While there have been no store closures announced just yet, in a statement posted on the Guitar Center's website, the company said it was entering a restructuring deal to reduce its debt by $800 million. And for more stores that are shutting their doors, This Iconic Sporting Goods Company Is Closing Stores Nationwide.
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