Philip Green

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Sir Philip Green is a British billionaire businessman who owns some of the United Kingdom's largest retailers, including British Home Stores (Bhs/BHS) and the Arcadia Group. He is Britain's fourth richest man, with a total of 2,300 shops in the UK and assets worth around £3.61bn. His assets currently control 12% of the UK clothing retail market, making his empire the second-largest in the sector. The leader, Marks and Spencer, has been the target of two unsuccessful takeover bids from Green.

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[edit] Early beginnings

Philip Green was born into a Jewish family on March 15, 1952 in Croydon, in South London, and has a sister, Elizabeth, five years his senior.The family moved to Hampstead Garden Suburb, a middle-class enclave in north London, and at the age of nine he was sent to the now-closed Jewish boarding school Carmel College in Oxfordshire. When his father died of a heart attack, at the age of twelve, Philip was in line to inherit the family business. After leaving boarding school at 15, he worked for a shoe importer before travelling to the US, Europe and the Far East. It was on his return that he set up his first business with a £20,000 loan, importing jeans from the Far East to sell on to retailers in London.

In 1979, Green bought up the entire stock of ten designer label clothes sellers who had gone onto receivership for extremely low prices. He then had the newly-bought clothes sent to the dry cleaners, got them put on hangers, wrapped them in polythene to make them look new, and then bought a place to sell them to the public.

He made his first million by cleverly buying, turning around and finally selling a failing retailer called "Jean Jeannie". Buying the company for £65,000 plus debt, which he negotiated a goodwill gesture of £100,000 with the main lending bank to freeze repayments with as he tried to turn the business around, he ended up selling for £9 million of which he paid off its debt and walked away with £6 milion. These early examples of entrepreneurship and clothes retailing expertise were to foreshadow his later bigger successes.

[edit] Green's empire expands

In 1988, he became Chairman and Chief Executive of a quoted company called "Amber Day", which sold menswear. The shares performed well, but then suffered a series of profit downgrades; indeed, in 1992 he was forced to resign by the company's leading institutional shareholders. He has not led a quoted company since. Ever since, he has relied upon a close group of like-minded entrepreneurs, including Tom Hunter (a sports shoe millionaire and one of the richest men in Scotland) and the Barclay brothers, to help fund his buccaneering forays into the UK's High Streets. In the early 1990s Philip Green had bought the department store chain Owen Owen which at the time had about 12 branches trading under the Owen Owen and Lewis's brand names. During his ownership most of these department stores were sold to other operators including Debenhams and Allders or were closed leaving only the Liverpool branch trading as Lewis's remaining. In 2004 this remaining store was sold off to David Thompson.

In 1995 he linked with Tom Hunter to buy another company,OLYMPUS, as part of a merger. The price was one British pound, plus the assumption of £30 million in debt. Green and his partners sold the company three years later to JJB Sports for £550 million. Green walked away £73 million richer. That encouraged the Barclay brothers to back him in the £538m acquisition of the Sears retail chain (a different Sears from the large American company) in 1999. The subsequent disposal programme (including selling some of the assets, ironically, to Arcadia) raised £729m and confirmed his reputation as a man who could deliver within the retail sector.

Philip Green came to public attention in 1999 when he attempted to make a £7 billion hostile bid for Marks and Spencer. However the leaking of the bid forced up M&S's share price. The board of M&S were also hostile to the bid and sought to block it. Eventually Green gave up and purchased the ailing retail chain BHS for £200 million. His takeover came when everyone else had dismissed the company as a failing brand and unfixable. Green put up £50 million of his own money and borrowed another £150 million to seal the deal. Green completely turned the company around, rebranded it as Bhs, and the chain is now thought to be worth over £1.2 billion. Since he took over, profits have tripled to over £200 million a year.

Next, Green purchased the Arcadia Group, which owns well-known High Street chains such as Burton, Dorothy Perkins, Evans, Miss Selfridge, Outfit, Topshop/Topman and Wallis in 2002. Recently he has added the Etam chain to the group. Green paid £850m, and repaid the £808m he borrowed to finance the deal in two years, a move that stunned commentators when it was announced. The Arcadia Group has been enormously profitable, and currently has pre-tax profits of around £380 million.

[edit] Recent bid for M&S

In 2004, Philip Green re-launched his Marks and Spencer bid, with £8 billion of cash available. He later increased the offer to £9.1bn to buy Marks & Spencer, putting up a large chunk of his own money. In the end, the deal fell through, as he would not budge from his top offer of £4 a share, and he was refused a chance to look at the company's accounts. On July 15 of the same year, Green announced, through a holding company, the withdrawal of the offer to acquire M&S.

[edit] Other activities

On October 20, 2005 Green awarded Arcadia shareholders a £1.3 billion dividend. Himself and his wife are joint owners of 92% of the group, and therefore received £1.17bn - the largest payout to an individual in British corporate history.

The tycoon has also pumped more than £6m into education, of which the bulk has gone into his retail academy (a form of specially-funded further education establishment in the United Kingdom). It now has 120 students, of which half are graduates. Not surprisingly, he has been described as 'flash'; he owns a £20 million yacht and a £16 million private jet. For his son's Bar Mitzvah in 2005, he spent £4 million on a three-day event for over 200 friends and family in the French Riviera. He also hired Andrea Bocelli and Destiny's Child to perform, both extremely popular at the time. For his 50th birthday, he flew 200 guests to Cyprus for a three-day toga party. For his birthday, his wife bought him a solid gold Monopoly set, featuring his very own acquisitions.

Green was knighted on 17 June 2006.

[edit] Criticism

Green's rise to the top of the high street pecking order has not been without controversy. Anti-sweatshop campaign groups, in particular Labour Behind the Label, No Sweat and Tearfund have criticised Green for his use of cheap labour. The tycoon is well known for his ability to turn the screws on his suppliers, as well as for his volatile temper in the face of such accusations.

Despite being a prominent figure in UK retail and business, Philip Green has chosen to avoid paying tax in the country. It is estimated that he and his family saved £300m in 2004-2005 by living partly in Monaco, where residents do not have to pay income tax. Whilst some may see this as the prerogative of a successful and wealthy businessman, others have questioned the morals behind this decision saying it is motivated by greed and is a mean-spirited display of making money from the people of Britain whilst refusing to contribute, and it has even been suggested that British Home Stores should be forced to drop the 'British' from their name.

An article in the Observer questioned the the amount of the dividend the Greens paid themselves and the accumulated profits available for distribution [1]. Company law in the UK says that dividends can only be paid out of accumulated realised profits. According to the article the Greens paid themselves a dividend of £1.14 billion (total dividends were £1,299 million), when the Profit & Loss account showed a positive balance of £476 million.

There has also been accusations that Philip Green is an asset-stripper as seen with his experiences with Owen Owen and purchase of the UK arm of Etam which have seen a wide sell-off of stores but Philip Green denies this accusation. "I'm an operator, not an asset stripper," he snapped. "I don't look to rape the businesses - I'm looking to develop the businesses and trade them." [2]

[edit] External links and references

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