Arcadia's brands 'lose half their value' in under a year

By

Sandra Halliday

Published
Dec 4, 2020

Arcadia’s brands were estimated to have a total value of £800 million back in January but that has more-than-halved today as its administrators seek buyers for the various assets.

Brand Finance said this week that its January valuation saw Topshop accounting for more than £400 million of that £800 million. And it remains the most valuable asset, even at the group’s lower value.

Richard Haigh, Brand Finance MD, said that “much of the value will now have been lost due to the collapse of the business, but Arcadia going into administration offers an unmissable opportunity for strategic acquisitions. Deloitte will have an interesting job extracting the value from an impressive portfolio of brands.”

As mentioned, it sees Topshop as the most desirable of the brands with its Global Brand Equity Monitor survey showing 93% of UK consumers are aware of it and 60% are familiar with the brand. Furthermore, 73% of those familiar with it would consider purchasing from the retailer, figures that “are in no way the hallmark of a dead brand”.

Haigh said that Topshop’s “sheen has slipped in recent years – not helped by the various scandals that owner Philip Green has found himself in”. But this could mean that under a new owner, Topshop (and linked menswear brand Topman) have a chance to not only bounce back but to shed any toxic associations.

Yet Haigh also told the Telegraph that the Arcadia brands as a group are likely be sold for less than half of the £800 million valuation of less than a year ago.

The brands also include Miss Selfridges, Dorothy Perkins, Burton, Wallis, Evans and Outfit,

Haigh told the newspaper that “ultimately you are always going to see a reduction in price when you go into administration because people know you have to sell, so I would be very surprised if they went for what we originally estimated their value at. The pandemic has probably added further damage”.

Suggested possible bidders so far include Boohoo and Mike Ashley’s Frasers Group. However, the former is likely to want to shut all stores and it has also been suggested that the administrators at Deloitte would be likely to favour bidders that are prepared to continue running at least some of the stores.

While Mike Ashley remains committed to physical stores, he has plenty of space already so might be more likely to want to integrate brands into his existing operations.