Topshop Or Will Sell International Business, Shandong Ruyi Has Been Deliberately Acquired.

In the case of the fast fashion environment in the UK, the Arcadia group, the parent company of Topshop, has been at its most critical time.

According to the times of the United Kingdom, Arcadia group sent a voluntary bankruptcy agreement CVA proposal to creditors last week, which will be announced as early as this week. The analysis is expected to include closing 57 stores, reducing rent and pensions.

It is also reported that Arcadia group is considering selling or shutting down its depleted international business.

It is reported that more than half of the group's overseas stores belong to the franchise business. Only Topshop stores in Ireland, France, Germany, Holland, the United States and Australia are operated directly by the group.

Arcadia group has signed an agreement with HSBC in April, which will act as a guarantor of its ability to pay the supplier's loan capability.

The complex structure of the Arcadia group's business means that it has to implement up to eight separate bankruptcy procedures, each of which must be approved by 75% of the creditors, which means that the decision of the owners is greater than the group's outcome.

Insiders say that after a series of similar procedures such as Debenhams, NewLook, Mothercare and Carpetright have allowed creditors to lose money, they are more likely to vote against Arcadia's CVA proposal.

However, in recent years, the performance of many fast fashion brands of Arcadia group has been performing poorly. The core brand Topshop has been hit by the ultra fast fashion of Asos and Boohoo, which has become one of the biggest drag on the group, and the patience of investors has gradually drained away.

According to fashion headline data, in the 12 months ended August 26, 2017, the loss of two brands of Topshop and Topman reached 11 million pounds, while sales fell 6% to 933 million pounds compared with the same period last year.

As of August 2018, Arcadia Group sales fell 10.5% to 1 billion 700 million pounds compared with the same period last year.

Arcadia group, founded by PhilipGreen, founder of Topshop, owns Topshop, Topman, MissSelfridge, Burton and DorothyPerkins brands. Currently, it operates more than 1500 stores and franchise stores in the UK, with a total of more than twenty thousand employees. The company has a 75% stake in the company controlled by PhilipGreen wife ChristinaGreen, and another 25% stake was acquired by the US private equity fund in 2012.

Since 2016, the brand of Arcadia group has closed 210 stores in the UK. At present, 100 brand store tenancies will be closed after the expiry of 2020. Topshop abruptly closes Tmall flagship store and withdraws from the Chinese market at the end of last year.

In the face of the trend of continuous decline in physical store traffic and the shift of consumers to mobile terminals, Arcadia group has realized that the number of stores is too large and its staff redundant after completing the internal audit of the group. It will improve the profitability of the group by closing down some poor performance stores and layoffs. Last year, it has cut about 300 employees.

At the end of February this year, the insurance company EulerHermes decided to further reduce the Arcadia group's credit insurance limit.

The credit insurance quota is the credit guarantee provided by the supplier to the retailer. The weakening of the quota makes the supplier unwilling to provide the retailer with the product or ask the retailer to provide the advance payment, which means that the cash flow of the Arcadia group will be seriously affected.

According to Forbes's data, the wealth of the PhilipGreen couple shrank by 27% to 3 billion 500 million dollars compared with the US $4 billion 800 million in 2018.

To add insult to injury, the Arcadia group is also facing a huge pension fund deficit.

According to information released by members of the British Parliament in 2017, the group's pension deficit has exceeded 565 million.

It is reported that Arcadia group has proposed to pfer the Topshop building of Oxford square in London to the trustee of the pension fund, so as to cut its annual expenditure by half.

But the building, which is estimated to be worth about 400 million pounds, also carries a mortgage of 300 million pounds, reducing its value as a trading tool.

Topshop London flagship store has always been a major brand feature of brand attracting consumers, but its luster gradually dissipated in recent years.

Similar sales fell by 20% during the Christmas trading last year.

In addition to environmental problems like rising costs and falling consumer desires, Arcadia is also deeply influenced by the scandals of PhilipGreen's alleged sexual harassment of several headquarters employees.

At the end of last year, PhilipGreen was accused of using confidentiality agreements to curb the victims of sexual harassment, exposing his behavior and paying more than 1 million pounds to the informed employees.

Although PhilipGreen subsequently denied this statement, British congressman PeterKyle wrote to the metropolitan police chief, asking the police to investigate the matter and win the compensation for the victims. The Labour Party chairman IanLavery appealed to the government to deprive PhilipGreen of her title.

Some analysts pointed out that once the bankruptcy of Arcadia group will result in a large number of store failures and employee unemployment, it will further blow up the British retail industry.

Before that, British fashion retailers such as NewLook, FrenchConnection, LKBennett and HouseofFraser also filed for bankruptcy protection or were sold for sale. Marsha's department plans to close 100 British stores or cut 1000 jobs.

According to Altus, British real estate research firm, since last Christmas, there are 400 unemployed people in the high street fast fashion industry including Topshop, NewLook and so on. So far, 14 thousand jobs have been lost and 4345 jobs are still in danger.

The industry said that, considering the UK's sluggish retail industry, sales of Topshop could hardly improve in the short term. The sale may be a good choice, but the buyer's final bid for Arcadia group may be less than 500 million, because after the acquisition of Topshop and Topman, it will face heavy reorganization and deal with a large number of redundant stores.

It is noteworthy that in February of last year, it was reported that the domestic investment giant Shandong Ruyi group would buy some or all of the shares of Arcadia group, but did not disclose the details of the paction amount.

Subsequently, Ruyi group and Arcadia group denied the news.

Qiu Yafu, chairman of Ruyi group, said in an interview with Bloomberg that after spending $4 billion to buy luxury fashion companies such as SMCP, Bally and Lycra, it will slow down the pace of acquisitions and shift its focus to its brand matrix. It aims to revitalize the acquired business in 5 years, and reveals that the future will only consider buying a brand that is profitable and has high growth potential.

In view of Topshop's own problems and Britain's fast fashion weakness, the market has not given too much breathing space to the former giant.

As of press release, Arcadia group has not responded to relevant news.