Then as now the UK high street was collapsing, with big retailers falling into administration. In the nation of shopkeepers, where consumer spending accounts for an outsized share of the economy, this always hurts.
But in October 2008 I was on a different stricken island, reporting on the Icelandic financial crisis. Ever mindful of FT expenses, I was staying outside Reykjavik in a hotel that overlooked the runway of the city’s private airport. This proved fortunate. Glancing out of the window I saw two men walking across the tarmac, distinctive even at a distance: one short and chubby, the other tall with shoulder-length hair. I phoned the short one: “How’s Iceland?”
“How should I know?” replied Philip Green. “I only just got here.”
Sir Philip, whose Arcadia group was the UK’s biggest fashion retailer, was there with Jon Asgeir Johannesson, then head of Icelandic investment group Baugur. After an aggressive debt-fuelled spree buying up stakes in retailers from Hamleys to House of Fraser, Baugur was now in peril. Always with an eye for a bargain, Sir Philip had flown in on what was supposed to be a secret salvage mission.
Today, we are in the next global economic crisis and it is Sir Philip’s own empire on the brink. In the intervening 12 years, he has been pilloried in the press and by MPs as the “unacceptable face of capitalism”. Steve Coogan portrayed a version of him in a movie entitled Greed. When it seemed he could sink no lower, he was accused of racism, sexual harassment and assaulting a pilates instructor.
The worst allegations — denied or dismissed by Sir Philip as “banter” and by his lawyers as never “unlawful” — have unfortunately not received a full airing. Complainants received payouts and signed non-disclosure agreements. The lawsuit regarding the pilates instructor was dismissed.
The charge of asset-stripping has not gone to trial either but the 68-year-old has been convicted in the court of public opinion. He sold his ailing homeware chain BHS for a pound and it quickly collapsed, leaving a pension deficit. His family took more than a billion pounds out of Arcadia in a dividend that was tax-free, thanks to a Monaco residency. He was never even a proper retailer, his many critics now agree.
Yet even after shedding BHS he contributed £363m to help plug the pension hole when it was not clear he had any liability. The Arcadia dividend was paid way back in 2005 and the business has continued trading since, employing many thousands of people for many more years.
It is far less aggressive than the typical private equity playbook. Debenhams, a more iconic retail chain, is this week in even worse straits than Arcadia, heading for liquidation. Its previous owners include CVC, Merrill Lynch and TPG, who took a similar amount out of the business in dividends. Yet their faces are not deemed unacceptable: they are simply unknown. And their returns have almost certainly trickled into the pension pots of some of the morally outraged MPs.
The idea that Sir Philip was not a true retailer is wrong. He had been buying and selling clothes for five decades, reaching industry heights with the Topshop brand. His rag trade instinct deserted him in the end but who exactly has won the high street? Most established retailers have crumbled under the challenge from digital natives, unable to build a compelling online business while saddled with unaffordable rents for dying stores.
Sir Philip is portrayed as a Luddite for not investing sufficiently in online sales, as if that were a simple decision — take a dividend or become Amazon. Most retailers have failed to make a successful transition from bricks and mortar to ecommerce. Meanwhile, one of the few to have weathered the storm on the high street, fast-fashion chain Primark, has shunned online sales altogether.
There is something else at work too — distaste for the wheeler-dealer made good. His parties and celebrity schmoozing were considered vulgar. He was accused by MPs of being a “spiv”. Three commenters under one FT article this week described him as a “barrow boy”. A campaign was launched to strip him of his knighthood, as if that is what mattered.
Now the administrators are totting up the stock balances, the rent payments and the pension deficits. The audit of Sir Philip himself, however, the good and the bad, is incomplete.
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