Friday 22 January 2021 3:13 pm

Topshop set for discount sale price after Next pulls out of race, analysts say

The bidders circling Sir Philip Green’s collapsed retail empire Arcadia could bag a good deal to buy Topshop, after Next – a frontrunner to rescue the firm’s “crown jewel” – pulled out of the race. 

Restructuring experts said Next’s exit from the sales process will put the other bidders in a stronger position, making it “ripe for a buyer to reel it in at a lower price.”

“This is a trend that is likely to be more common in the coming months as funds from rescue packages dry up,” Julie Palmer, partner at restructuring firm Begbies Traynor, said.

Next last night announced it had withdrawn from the bidding process after it was unable to meet Arcadia’s price expectations. 

Read more: Next pulls out of plans to buy Topshop-owner Arcadia

Next – which was bidding as part of a joint venture with US investment firm David Kempner – wished the future owners “well in their endeavours to preserve an important part of the UK retail sector”.

Next and bidding rivals tabled final offers for Topshop earlier this week, with other Arcadia brands such as Dorothy Perkins and Burton being sold through a separate process.

Chinese online retailer Shein is among those reported to be bidding for the high street chain. Sky News reported the e-commerce giant has put in an offer worth more than £300m to buy Topshop and Topman.

Other bidders reportedly include Boohoo, Asos, Authentic Brands – the owner of US department store Barneys – which is working with JD Sports. 

Despite Next’s withdrawal, experts were confident that buyers will be found for some of Arcadia’s “crown jewel” brands.

“This is not the end of the road for Arcadia as there is a chance to save some of the existing viable brands such as Topshop, which can be evolved with the right strategy,” Chris Hunt, head of retail at law firm Gowling, said.

“It’s highly likely that the Group will be separated and sold as singular brands to attract more buyers – possibly to online retailers such as Asos who already have the engaged audience. Whatever happens, utilising supply chain agility and concentrated market intuition will be the main challenges for whoever wins the race.”

Palmer added that “ the likes of Arcadia have built too many good brands to disappear completely”.

Read more: Deliveroo appoints Next boss Simon Wolfson to board

“Many of the names that we associate with the Arcadia Group will continue in some form because in a time like this there are always good deals to be had for those with the power to command them,” she said.

Topshop and Topman owner Arcadia went into administration in November, putting over 13,000 jobs at risk and becoming Britain’s biggest corporate casualty of the Covid-19 pandemic.

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