A woman holding an umbrella walks past the Topshop flagshop store in Oxford Circus as it opens for customers.Top Shop business continues after Sir Phillip Green Allegations, London, UK - 26 Oct 2018

LONDON — After seven years, Leonard Green & Partners and Sir Philip Green are calling time on their Topshop/Topman partnership.

Leonard Green & Partners said it has sold its 25 percent stake in Topshop/Topman back to parent company Arcadia Group, and confirmed that its directors have resigned from the Topshop/Topman board.

“The transfer simplifies the shareholding structure of TSTM and enables the Arcadia board to focus on the restructuring options currently being considered,” Leonard Green & Partners said. The investment company added that it remains supportive of the business, “and has the opportunity to repurchase its stake in TSTM in the future.”

On Thursday, Arcadia owner Sir Philip Green declined to comment on the sale of the stake, but industry sources said there was no acrimony to the split, and the two groups could well partner again to back Topshop and Topman.

According to a report by Sky News, Leonard Green sold the stake back to Philip Green for just $1.00, reflecting the state of Philip Green’s Arcadia retail empire. A spokesperson for Philip Green declined to comment on the Sky report.

The sale of the 25 percent stake back to Arcadia comes amid Philip Green’s plan to restructure the retail giant, parent of brands including Topshop, Topman, Burton and Miss Selfridge as a wave of change, rising costs, falling footfall and soaring debt hit the U.K. high street.

Philip Green and Leonard Green had inked their deal in late 2012, and their plan was to generate $1 billion in revenue from the Topshop and Topman brands in the U.S. and to double the brands’ worldwide sales over the next three to four years. The deal valued Topshop and Topman at $3.22 billion.

The partners didn’t reach their target, and the seven years that passed would prove inauspicious for Philip Green on a number of levels.

While the two retailers successfully expanded into the U.S. through Nordstrom, Green was hit by a whirlwind of scandal: There was the sale and subsequent collapse of Green’s former retail chain BHS, a Parliamentary grilling over his responsibility for the hole in its pension fund, a tsunami of crises on the U.K. high street and a workplace harassment scandal which The Telegraph newspaper broke last fall.

Earlier this week, British retailer Debenhams, where Arcadia has a host of concessions for its various brands, sought bankruptcy protection. Debenhams is the latest U.K. retailer to cry for help, following L.K. Bennett and Pretty Green, both of which sought bankruptcy protection earlier this year. Pretty Green has since been purchased by JD Sports while L.K. Bennett is still looking for a buyer.

Asked on Thursday about the Arcadia restructuring, Green said it was “a work in progress,” but declined to give further details.

In the meantime, Green has been reinforcing the boards of Arcadia Group, its parent Taveta Investments and Topshop/Topman with new members Jamie Drummond Smith and Peter Bloxham.

Drummond Smith has been appointed interim chairman, while Peter Bloxham has been named interim non-executive director. Drummond Smith is a corporate restructuring expert and a former partner at Deloitte & Touche. Bloxham was previously a partner at Freshfields law firm, where he worked as head of restructuring and insolvency.

Since leaving Freshfields, he has continued to offer independent advice to a number of corporates undertaking financial restructuring, Arcadia said.

Drummond Smith said that Arcadia and Topshop/Topman have faced “unprecedented market conditions on the U.K. high street. We will be supporting the boards as they progress the restructuring options for the businesses to create a stable platform for the group to implement its turnaround plan.”

As reported, sales and profits at Taveta Investments Ltd. declined in the 12 months to August 2017. Profit from continuing operations fell to 71.6 million pounds from 139.1 million pounds, due to a combination of factors, including the slowdown in sales and an exceptional charge from onerous leases and the revaluation of investment properties.

Turnover dropped 5.3 percent to 1.9 billion pounds due in large part to a slowdown in footfall that’s been impacting high-street retailers up and down the U.K.

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