Arcadia slumped to £177m loss ahead of CVA
Arcadia, Sir Philip Green's fashion retail empire, has laid bare the state of its finances in the year before its move to shake up the business with a radical recovery plan.
In annual accounts for the year to September 2018 filed to Companies House, the retailer’s holding company Taveta Investments reported a loss of £177.3 million.
The group said it had incurred £217.1 million of exceptional costs, which meant it swung to a loss despite making a profit on an underlying basis. This compares to a profit of £49.4 million posted in the previous year.
The accounts show the health of Arcadia’s business in the run-up to a series of Company Voluntary Arrangements (CVAs), which it proposed in May as part of a wider three-year recovery plan.
Landlords eventually voted through the plans in June, giving the green light to close 23 stores and slash rents on many more, though Sir Philip and his wife Lady Tina were forced to offer some concessions funded from their own pockets to get approval for the measures.
Other elements of the recovery plan included pushing its US operations into administration, leading to the closure of its 11 stores in the country, and shuttering an additional 25 Evans and Miss Selfridge stores.
However the group revealed in its latest filings that the recovery plan faces another obstacle later this year when the mortgage on its Oxford Street store comes up for renewal.
The mortgage of £310 million on the address was due for repayment in June this year, but the facility was extended until December. Arcadia is currently in discussions to secure fresh financing for it.
The building has been partly let to other brands as Arcadia seeks to minimise its costs. Vans is to take over the former Miss Selfridge portion of the building, while current tenant Nike has expanded its store to an additional floor.
Arcadia said it was confident of getting new finance with a reasonable rate of interest.
Meanwhile the group revealed that it is to list its brands with high street retailer Next, following similar moves to partner with both ASOS and Shop Direct's Very.co.uk as third party sellers.