The accusations of discreditable conduct levelled at Arcadia chairman Philip Green may prove a severe setback for the billionaire retailer, but are ultimately likely to be less relevant to his business empire than the pressing commercial issues it faces.
Sir Philip was named in parliament on Thursday as the subject of allegations of racial abuse and sexual harassment. He has categorically denied the accusations, but within hours of being named under parliamentary privilege by Lord Hain, a hashtag #pinknotgreen was trending on Twitter calling for boycotts of Topshop stores.
Feelings were already running high in some quarters after an incident earlier this month when a pop-up stall promoting a book about feminism was abruptly removed from the Topshop store on Oxford Street. Scarlett Curtis, the author of the book tweeted on Friday: “This man is a racist, sexist bully.”
Topshop, which markets itself at women aged 16-24 in particular, is regarded as the jewel in the crown of the Arcadia empire, which also owns womenswear brands Wallis, Dorothy Perkins, Evans and Miss Selfridge along with menswear chains Burton and Top Man.
Catherine Shuttleworth, founder of marketing agency SavvyThinking, said that in the era of #metoo and social media, the allegations could be “the start of the end”.
“Millennials do choose to participate in businesses that reflect their values. You could get people standing outside stores waving placards saying: ‘Don’t shop here,’” she said, adding that allegations of this nature were far more damaging than the 2016 outcry over his role in the collapse of department store BHS.
Hadley Baldwin at the Berkeley Partnership said the personal conduct of senior executives usually had little bearing on customer perception. “But with ‘celebrity’ executives the news reach is much broader and it could affect sales initially,” he said, adding that “consumers’ memories can be shortlived where it’s convenient”.
Much may depend on what happens next. “Some people are suggesting he is the next Harvey Weinstein,” said one retail executive, referring to the Hollywood executive whose fate after facing allegations of assault helped triggered the #MeToo movement. “If it is anything near that then it will be a major drama, but we just don’t know yet.”
The executive and another person the Financial Times talked to expressed surprise about the nature of some of the reported allegations. “I never heard him talk about race or sex, ever. It was always about business,” said one analyst who knows him.
Some have also questioned the motives of Lord Hain. Dominic Grieve, the Conservative MP and former attorney-general, said the decision to name Sir Philip under parliamentary privilege was “arrogant” and had “absolutely no regard for judicial process or the rule of law.”
Mr Grieve argued that, by taking his action, Lord Hain had driven “a coach and horses” through a court case in which the Daily Telegraph had been seeking to publish confidential information from five employees of Sir Philip.
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Lord Hain, who is an adviser to the law firm that is representing the Daily Telegraph, said the decision to name Sir Philip was a personal one. He added that he was “completely unaware” that Gordon Dadds was acting for the Telegraph in the case.
The accusation of bullying staff is less surprising. “He has always had a reputation for being bombastic and aggressive,” said the retail executive. “But he also had a reputation as being king of the High Street. A decade ago Arcadia was the go-to brand for anyone who wanted a career in fashion.”
That is less the case today. Arcadia has not paid a dividend for several years, and its last set of accounts — for the year to August 2017 — showed operating profit falling 40 per cent to £124m. Its revenues of around £2bn are a third of Primark, the budget fashion brand owned by Associated British Foods. Arcadia is closing stores as leases run off, and investing instead in ecommerce, an area where it is perceived to be behind high street rivals such as Zara owner Inditex. Even Topshop, associated with models such as Kate Moss, has “come off the boil in recent years”, according to Maureen Hinton at Global Data.
The other analyst said the exposure in the Telegraph may reflect his waning influence. The newspaper is owned by the billionaire brothers David and Frederick Barclay, who in the 1990s helped to finance Sir Philip’s bid for Sears — the deal that made his reputation in the City. One former Telegraph reporter tweeted that in years gone by, he could “kill off any seriously negative stories” in the paper. This time, he had to resort to expensive legal manoeuvres.
Coming on top of the controversy over BHS, some speculated about the possible effects on staff morale at Arcadia, given that many of its employees are female. Defenders of the company point out that it is in the process of handing over the role of finance director from a man to a woman; Gillian Hague joined the board this week. Its chairman is Karren Brady, a well-known businesswoman and Conservative peer.
The latest revelations may also complicate any attempt by Sir Philip to sell all or part of Arcadia. Speculation about an eventual exit has persisted for some time, despite his vehement denials. In February, he said that Arcadia “is not in discussions with any party regarding a partial or total disposal” after media reports linked the company to Shandong Rui, a Chinese textiles group.
One banker specialising in retail suggested that performance of the business was a far more important factor for any acquirer than the chairman’s individual reputation, adding that nobody would buy the business “in a million years” given the perceived weakness of some of its brands and the £300m pension deficit.
https://www.ft.com/content/da69be2e-d938-11e8-ab8e-6be0dcf18713
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