Arcadia’s potential bidders have had a glimpse of the decline of its brands and its inability to catch the wave online. Trustees have signaled they are open to a break-up of Sir Philip’s empire as some parts are in worse shape than others.
Previously undisclosed financial data shows that from the year to September 2019, the drop in Arcadia Group sales accelerated to £ 200million, leaving it with annual revenue of $ 1.6 billion of pounds sterling.
Potential bidders were told that three of its eight brands – Evans, Miss Selfridge and Outfit – were contributing to losses in Main Street operations, even before fixed costs such as rent pushed them further into the red. .
Among the strongest Arcadia chains, Topshop is considered by city sources as the most attractive for a bidder such as Authentic Brands.
Its sales last year were £ 651million, of which just £ 120million online, where competing fast-fashion retailers such as Boohoo and Asos thrive. The two have been speculated as possible bidders for Topshop, which is valued at around £ 200million.
Overall, only 19% of Arcadia’s sales are made online, and the numbers show that the Debenhams website is making a significant contribution, especially for the Wallis and Dorothy Perkins brands.
Despite Arcadia’s slow digital progress, its online sales are much more lucrative than its department stores. Figures that give potential bidders an approximation of operating profit show actual overall margins of just 4.7%, compared to 20% online.
Last week, Deloitte asked Arcadia suppliers to accept an 80% reduction on inventory en route to stores. In a letter seen by The telegraph he wrote: “The corporations in administration hold legal title to all the inventory that has been released from your factory and therefore are not legally obligated to pay for any inventory in that category.”
Authentic Brands did not respond to a request for comment.