Arcadia furloughs the vast majority of its staff

Arcadia Topshop

Sir Philip Green’s fashion empire Arcadia is to furlough 14,500 of its 16,000-strong workforce amid the Coronavirus crisis.

The group’s stores have all been closed since 21 March and all store staff have been furloughed but as of 5 April most of the head office staff will also be placed under furlough.

Under the scheme, introduced by the Government to support business through the crisis, the Government will pay 80% of a person’s salary up to £2,500 per month. A company has the option of topping up any wage beyond that.

While Arcadia, whose brands include Topshop, Topman, Dorothy Perkins, Burton, Miss Selfridge, Evans and Wallis, has closed its physical stores, its online operations remain working, in a reduced capacity, and some head office staff in “essential” roles are being retained.

In addition to the furlough measures senior management have agreed to pay cuts between 20% and 50%, while CEO Ian Grabiner is taking no salary or benefits from the business and this time.

In a statement, Grabiner said: “The health and wellbeing of our employees, customers and communities remains paramount. The actions we have taken are essential in order that we can manage our business through these unprecedented times. We are grateful for the support and understanding of our staff and all of our stakeholders during this incredibly challenging time. We look forward to opening our store doors again as soon as it is safe to do so and welcoming back our colleagues and customers.”

The dramatic move would be cause for concern for other retail employees, said GlobalData Lead Analyst, Sofie Willmott: “Arcadia’s plan to furlough the large majority of its workforce does not bode well for other retail employees with many other clothing & footwear players now likely to follow suit. With clothing & footwear spend dropping off a cliff, despite many websites continuing to operate, retailers are cutting costs where they can to protect their long-term futures.

“Understandably there is no work for store staff while non-essential physical locations remain closed and head office employees will have little to do other than manage the cancellation of orders and attempt to drive online sales. Future range planning will be difficult without an end to the strain on discretionary spend in sight and retailers will not want to commit to future inventory when sales are not coming through. This is likely to significantly hit future product drops and retailers will now need to carefully phase their intake and newness to try and provide shoppers with a cohesive range, ready for when they want to buy again .”