Lack of store investment cash means CVA proposal will not be enough to save Arcadia’s brands, says GlobalData

Following yesterday’s news (Wednesday 22 May) that Arcadia is to close 23 stores as part of its CVA proposal,

Chloe Collins, Senior Retail Analyst at GlobalData, a leading data and analytics company, offers her view on the chains current challenges:

‘‘The proposed closure of only 23 UK stores (4% of its current UK estate) and rent reductions at 194 stores, as part of its CVA, will not be enough to save Arcadia in a world where rising online sales continue to threaten the high street. The closures would leave a large portfolio of 543 stores remaining, and with only £50m to be invested as part of the proposal, any attempt to pay for an increase in store standards would be spread too thinly to make up for years of underinvestment.

“With FY2018/19 like-for-like sales for Arcadia reportedly dropping 9%, most of its brands such as Dorothy Perkins and Miss Selfridge have lost relevance in today’s retail landscape due to their uninspiring fashion ranges and weak multichannel offer. Even Topshop, which used to be Arcadia’s star player, has lost appeal among fashion shoppers thanks to tough competition from the likes of Zara, Primark and H&M, as well as online pureplays such as ASOS, PrettyLittleThing and boohoo.com. For Arcadia to survive, Green must revamp its brands; ensuring they have a clear target audience, a point of difference from competitors, and enhanced digital platforms.”

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