The brands in Sir Philip Green’s fallen empire are likely to be sold for less than half the £800 million ($1.45 billion) they were worth just months ago, experts have said, amid growing speculation that Boohoo is the frontrunner in the race to buy Topshop.
Rival retailers and private equity groups will be watching closely to see if they can bag a bargain as the likes of Miss Selfridge, Wallis and Dorothy Perkins are put up for sale.
The brands were valued at £800 million in January by consultancy Brand Finance, with Topshop alone accounting for almost £400 million.
But they are now likely to be worth less than half that sum, according to Richard Haigh of Brand Finance. He said: “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 so I would say the price will be below 50 per cent of what we had valued.”
There could be several bidders for the individual brands, particularly Topshop and Topman, as these are seen as Arcadia’s crown jewels.
The boss of one rival retailer said Boohoo was viewed as the frontrunner in the race to buy Topshop.
The comments add to speculation of a swoop by the online fashion retailer, which acquired Oasis, Warehouse, Karen Millen and Coast earlier this year as they fell into administration.
Sir Philip’s long-time rival Mike Ashley is also thought likely to make an offer. Asos, meanwhile, is widely believed to be uninterested in Arcadia’s businesses as its strategy more recently has been investing in its own in-house brands.
However, Arcadia’s administrator Deloitte will be seeking to preserve as much of the business as possible.
That means buyers are likely to get preferential treatment if they are willing to take on the entire Topshop/Topman operation, rather than just the brands and online platforms. Better still would be a buyer for the entire Arcadia group – provided the price is right.
John Stevenson, an analyst at Peel Hunt, said: “The most obvious outcome is for the brands to go online, apart from perhaps Topshop and Topman, and Boohoo will of course be interested, along with a wide variety of interests.
“But I think Boohoo would only get Topshop with a knockout offer as it won’t be interested in the physical shops and the administrators will be looking for a buyer to take it all.
“Topshop is a viable business that was delivering £1 billion of annual sales two years ago, so if you can revamp it that would be attractive.”
Mr Stevenson said the Sports Direct tycoon was an obvious buyer, although he too was not likely to be interested in any stores.
He said: “Ashley has a lot of physical retail space so would only be looking for brands to sweat his assets rather than picking up more.”
Arcadia collapsed into administration on Monday, putting the business into the hands of Deloitte, who will now seek buyers for the various brands or the entire group.
Asos and Boohoo were unavailable for comment.
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Source: Thanks smh.com