Sunday 5 April 2020 1:02 pm

Arcadia and Debenhams eye drastic measures as coronavirus pummels retailers

The UK’s retail sector is creaking under the weight of coronavirus, with a number of high-profile names such as Debenhams, Cath Kidston and Arcadia Group scrambling to stay viable.

Topshop owner Arcadia could walk away from as many as 550 of its stores this week, serving notice to landlords weeks after it shut its physical stores, the Sunday Times reported. Arcadia said that “no decisions have been taken at this time”.

Read more: UK retail sales: Coronavirus triggers worst month on record

Struggling department store chain Debenhams failed to top up its pension scheme this month as it seeks a “holiday” for its contributions.

Debenhams is preparing to file for bankruptcy after also shutting its physical stores. The company has roughly 22,000 staff and only just staved off collapse last year.

Clothing and homeware retailer Cath Kidston on Friday filed a notice of intention to appoint law firm Alvarez and Marsal as administrators, according to Sky News. 

The move does not necessarily mean Cath Kidston – which is currently up for sale – will fall into administration. But it is a sign of the severe stress the UK high street is under.

The developments show the immense strain coronavirus and containment measures are putting on retailers.

It also highlights how unemployment – which is already rising dramatically – could surge if major companies go under.

Debenhams said it “is making contingency plans reflecting the extraordinary current circumstances”.

Regarding the failure to pay its pension contributions, which was first reported by the Sunday Telegraph, Debenhams said it “is not ‘dumping’ its pension liabilities”.

“Discussions with the trustees and the Pension Protection Fund are continuing for a temporary suspension in contribution payments, given the pensions regulator’s recent announcement that companies could access a three month pension contribution holiday.”

Controversial Arcadia mogul Philip Green furloughed 14,500 of the group’s 16,000 staff last week. 

Read more: Retailers urge government to release tax rebates amid coronavirus crisis

This means the company which paid a £1.2bn tax-free dividend to Green’s wife Tina in 2005 could well soon be supported by the taxpayer. Arcadia has also paused payments into its pension fund. 

Cath Kidston has been contacted for comment.