Arcadia, the parent company of popular British fashion brands such as Topshop and Dorothy Perkins, has announced that it will be suspending payments to its pension scheme for a minimum of three months in response to the ongoing coronavirus crisis. This decision, supported by the pension trustees of Arcadia, is aimed at conserving cash and ensuring the company’s survival amidst temporary store closures and widespread uncertainty.

It is important to note that this move could raise concerns, especially considering Arcadia’s previous dispute with the Pensions Regulator last year. In order to secure approval for its Company Voluntary Agreement (CVA), Arcadia’s chairman, Sir Philip Green, had agreed to inject an additional £25 million per year into the group’s pension scheme. This translated to monthly payments of over £2 million. However, these contributions will now be put on hold for at least three months or until the shutdown measures are lifted.

With the government’s order for all non-essential businesses in the UK to close, the fashion industry has been hit hard. The foreseeable future is filled with uncertainty, as the government plans to review the closure measures in mid-April. Dr. Jenny Harries, the deputy chief medical officer of England, has even warned that it could take up to six months for life in the UK to return to normal.

Arcadia’s decision to defer pension payments has not gone unnoticed by the Pensions Regulator. Being one of the largest privately owned employers in the UK, with around 18,000 employees across its different clothing brands, Arcadia’s financial struggles are of significant concern. Even before the coronavirus outbreak, the company had been facing challenges and had undertaken store closures and rent reductions in the past year. Like its competitors, Arcadia has been grappling with evolving consumer behavior, increasing business costs, and cautious spending habits.

As the coronavirus continues to have a major impact on businesses worldwide, the fashion industry is facing exceptional challenges. It remains to be seen how Arcadia and other fashion companies will navigate through these tough times and adapt to the new realities of the retail landscape.

Useful links:
1. British Fashion Council: https://www.britishfashioncouncil.co.uk/news/539/The-fashion-industry-and-Covid19-a-response#anchor
2. The Guardian: https://www.theguardian.com/world/2020/mar/26/how-long-will-it-take-to-get-back-to-normalafter-coronavirus