Arcadia's Sir Philip Green: the ups and downs of one of retail's biggest names
Administrators from Deloitte are poised to step in and take over at Arcadia next week, it had been reported. If it happens (and there's still a chance it might not), it could mark the denouement of the career of one of the British high street's most colourful characters, Sir Philip Green.
Sir Philip is known for his no-nonsense attitude and, unlike his peers who would feel bound by corporate culture or etiquette, PG – or SPG as he became known after his knighthood – would talk freely and frankly to the press, and anyone who was granted access to his mobile number.
This approach and accessibility won him many friends who cite his fierce loyalty and generosity as one of his defining characteristics. However the flip side was a volatile character who could fly off the handle (he famously came to blows with high street rival Stuart Rose, now Lord Rose, the former CEO of Marks & Spencer).
If the press rubbed him up the wrong way he would phone editors and journalists personally to express his upset in the strongest of terms. But it would often all be forgotten next time they spoke to him.
At the pinnacle of his career in fashion he relished the spotlight and his high profile catwalk shows for Topshop during London Fashion Week would see him in the front row, often flanked by supermodel Kate Moss and American Vogue editor Anna Wintour, along with his daughter Chloe.
But as a number of scandals hit his reputation, such as the collapse of BHS after he sold it to a known bankrupt for £1, and a #MeToo expose which led him to be named in Parliament as the businessman accused of staff harrassment and abusing gagging orders (Sir Philip has consistently denied the claims), his high profile friends peeled away and Sir Philip himself retreated to Monaco and retained a low profile.
His story begins in south London in 1952 when he was born into a wealthy Jewish family which had made its money from a series of petrol stations. However his early life was marked by tragedy when his father died when Sir Philip was just 12 and he was brought up by his entrepreneurial mother Alma, who was said to be a big influence on his future career.
Sir Philip’s first big break came in the late 1970s, when he bought the stock of 10 designer outlets, and resold them from a shop in Mayfair. He spent some time as chief executive and chairman of Amber Day in the late 1980s and early 90s, but left after the company missed a profit forecast; this was to be his last time working for a listed company.
However it was not until the early 2000s that Sir Philip truly emerged into the limelight, when he bought department store BHS in a deal worth £200m.
He subsequently bought Arcadia – which includes Topshop, Dorothy Perkins, Burton, Miss Selfridge, Wallis and Evans – in 2002 through his family-run business Taveta, of which his wife Tina, based in Monaco, is the director.
In 2005 Sir Philip famously paid himself £1.2bn in dividends from Arcadia, more than four times the company’s pre-tax profit. The money went to Tina in Monaco, meaning it was not taxed in the UK.
Around this time Sir Philip came close to buying Marks & Spencer in a £9 billion deal, but he pulled out before it was ever completed after investors rallied round the board, chaired by Paul Myners with Stuart Rose as CEO (both now hold the title of Lord).
Sir Philip initially turned around the loss-making BHS business, gaining plaudits in the process, after he vowed to steal market share and custom from M&S in revenge for rebuffing his take-over events.
Despite the controversy over his dividend, Arcadia appeared to go from strength to strength, with high profile collaborations with Kate Moss and Beyonce burnishing Topshop's credentials. It also became known for its support of new British fashion design talent and for a time it was one of the most talked-about brands on the high street. (However many put its success down to former brand director Jane Sheperdson who famously walked out after the Kate Moss deal was drawn up without her involvement).
But, over time, a lack of investment and a failure to capitalise on the growing online market meant Arcadia's brands failed to keep up with the changing face of retail. Sir Philip, who had become known as the "King of the High Street" was known as a great trader but not necessarily a great strategist and that exposed the business when more exciting, digital first rivals arrived on the fashion scene such as ASOS and Boohoo.
The 2008 global recession would be the start of his empire’s undoing. BHS was sold in 2015 by Sir Philip to serial bankrupt Dominic Chappell for £1. Just 11 months later the company finally collapsed and earlier this month Chappell was sentenced to six years in jail for tax evasion during his time running BHS.
Last year reports emerged that US investor Leonard Green & Partners sold its stake in Arcadia back to Sir Philip for one dollar, or 76p at the time. The private equity giant had bought a quarter of Arcadia in 2012 for a rumoured £350m.
The collapse of BHS was really when the shine came off Sir Philip. The closure cost 11,000 people their jobs and, perhaps more controversially, the company left a pension deficit of around £571 million. The Pensions Regulator later said that Sir Philip’s main reason for the £1 sale a year before BHS’s collapse was to avoid the pension deficit that was hanging over the firm.
In 2016, MPs passed a non-binding motion to strip the businessman of his knighthood, but after he agreed to hand over £363 million for the pensioners, the calls died down.
But he was once again returned to the limelight in 2018, after the Telegraph reported that staff were accusing an unnamed businessman, later identified in Parliament as Sir Philip, of sexual harassment and racial abuse, allegations he strongly refuted.
Despite many worries around the future of the business and the negative publicity, Sir Philip has until now managed to hold onto Arcadia and keep it afloat, which is no mean feat.
In April last year he appointed restructuring experts to the company, as the business geared up for a series of Company Voluntary Arrangements (CVAs), as part of a three-year recovery plan. Landlords gave the green light to the plan in June and more than 20 stores were closed with rents cut on many more.
Whatever happens next week, it would be unwise to rule out the possibility of Sir Philip Green managing to keep the wheels turning somehow, but with the prize asset of Topshop up for grabs rivals will already be circling and ready to pounce if the opportunity comes up to take it off him.
Sir Philip Green: a timeline of his career in fashion
Sir Philip, then just plain old Mr Green, buys up the stock of 10 designer outlets that have failed. He dry-cleans the stock and puts it up for sale again in a shop in Mayfair.
1981 to 1988
The aspiring businessman sets up several businesses, many with his mother Alma. Like the Joan Collins Jeans Company, many fail to get off the ground, and several are liquidated. He also makes several successful deals during this time.
Sir Philip is hired as the boss of Amber Day, the listed menswear group. He scores several victories in the role, and Amber Day’s share price rises. But he leaves in 1992 after the company misses on profits.
Sir Philip buys FTSE 100-listed department store BHS for £200m. He quickly gains plaudits for turning the struggling business around.
Sir Philip buys Arcadia Group, the owner of Topshop, through family business Taveta.
The businessman tries to take over high street giant Marks & Spencer but pulls out after getting very close to sealing a deal.
Arcadia pays out a £1.3bn dividend, £1.2bn of which goes to Sir Philip’s wife Tina, who lives in Monaco so does not have to pay UK tax.
Topshop launches a range of clothes designed by supermodel Kate Moss.
Protesters gather outside Topshop in Oxford Street, alleging the businessman is avoiding income tax.
Sir Philip sells BHS to Dominic Chappell for £1.
BHS goes into administration, leaving a pension deficit of £571m, and costing 11,000 people their jobs.
MPs pass a motion to remove Sir Philip’s knighthood over the pensions scandal, though it does not happen. He later pays £363m into the scheme.
The Telegraph reports that staff are accusing an unnamed businessman of sexual harassment and racial abuse. Sir Philip is later identified by an MP as the businessman in question. He has consistently refuted the allegations.
Covid-19 hits the high street. Arcadia closes 550 stores in line with Government demands and furloughs 14,500 employees. The stores are re-opened after the first lockdown but during the second lockdown it is reported that Deloitte is set to be appointed as administrator.