The rise and fall of Philip Green's retail empire

Topshop owner facing an uncertain future after years of lavish launch parties for its chains and paying out billions in dividends

Sir Philip Green's Topshop was once the go-to fashion brand for millennials before they began defecting to cheaper or more trendy brands. It now faces an uncertain future compounded by hundreds of store closures amid a pandemic that has devastated the high street. 

"TopShop until a few years ago was a very good brand, and it's not much less good now - but it sits in parts of the fashion market that are so intensely competitive," says Richard Hyman, an independent retail analyst. 

An increasingly diverse offering from rivals such as Primark, H&M, and Zara as well as online players such as Asos and Boohoo have been luring shoppers away from Arcadia’s brands. 

"All of those businesses are significantly bigger now than they were five years ago and I think TopShop has faced challenges from all sides," says Hyman.  

The group’s online offering has also been weak compared with peers, albeit it has been trying to compete more aggressively for orders via its websites. 

TopShop was launched as a trendy brand for young shoppers in the mid-60s, followed by TopMan in 1970 as part of The Burton Group. The latter was subsequently demerged in 1997, giving rise to Arcadia, which bought Wallis, Miss Selfridge and Outfit.

After Green bought the chains in 2002 for £850m, he expanded them even further overseas, and took TopShop - the jewel in the crown - to America and China. 

He became known as the "king of the high street" for his shrewdness of buying and selling businesses. The group was making so much money that Green's wife Lady Christina (Tina) Green was paid £1.2bn in dividends.   

Supermodels Kate Moss and Naomi Campbell were often spotted at Green’s lavish parties, with Moss one of the first celebrities to launch her own brand at Topshop. 

Kate Moss (on the right of Sir Philip Green) designed clothes for Topshop in the brand's heyday Credit: David M. Benett/Getty Images

But those star-studded partnerships have largely dried up, while new brands such as PrettyLittleThing have swooped in to secure the backing of the influential Kardashian family for their clothes. In contrast, singer Beyonce parted ways with TopShop to take total ownership of her athleisurewear brand Ivy Park. 

Arcadia insisted this week it was not working on an administration. Some industry observers, however, are still sceptical. Deloitte was first drafted in to advise the retailer almost two years ago. 

One restructuring source says: "They’ve been in there for a long time. You do wonder what the h--- they are doing. We know it isn’t an audit; it isn’t to do with tax; it isn’t consulting and big systems. We could see the beginnings of some kind of an adjustment of the shape of the business." 

It is also seeking a £30m loan to stay afloat, it emerged, but one City source points out that this would cover only a fraction of its day-to-day running costs. Arcadia has 15,000 employees across more than 500 branches. 

Non-essential retailers in England were recently forced to close for four weeks until Dec 2. During the first nation-wide lockdown, Arcadia furloughed almost all of its workforce. 

Sir Philip Green and Taiwanese actress Gwei Lun Mei cut a ribbon to mark the opening of a new Topshop store in Hong Kong in 2013 Credit: Jessica Hromas /Getty Images

"TopShop is a business that could be turned around, although it would take investment," Hyman adds. 

Any new injection of cash to revive the brands will compete with the regular payments that Arcadia has to make to plug its pension deficit. 

In a deal with the Pensions Regulator, trustees of Arcadia's pension schemes were granted security over £210m worth of assets by the company.  Lady Tina, Arcadia's biggest shareholder, agreed to pump £100m into the schemes over three years while Arcadia said it would inject a further £75m.

John Ralfe, an independent pension expert who advised the work and pensions select committee on BHS pensions in 2016, says: "Sir Philip thought he could sell BHS, with a huge pension deficit for £1, which we know came back to bite him for £363m [which he paid]. He seems to have learnt his lesson from BHS." 

Ralfe estimates that Arcadia’s pension deficit is £350m on a buyout basis. 

"If it does go into administration, the Pensions Regulator would have no grounds for legal action against him - the regulatory hurdles are high, and, unlike BHS, there would be no [so-called] act that avoided pension obligations."

Arcadia is understood to have contingency plans to secure the future of the business, but it could emerge in a dramatically different shape. 

In the words of one rival: "Philip is a fighter and a survivor. We’re still talking about him after years of trauma. He’s from a bygone age, and he’s made a lot of enemies, but I can’t imagine the clothing market without Philip Green in it."