Meeting Sir Philip Green can be an intimidating experience. Everyone who has encountered him has an opinion, but they’re frequently contrasting.
Is he the brash, foul-mouthed wide boy, who once rang a journalist to tell him he’d read his article and subsequently put it “under the cat’s arse where it belongs”? Or is he the multi-talented entrepreneur, the finest retailer of his generation, and the owner of one of the best minds in British business? All of the above, probably – and more besides.
To call Green’s tale a rags-to-riches one would be to stretch an overused term, but the middle class, Croydon-born Jewish boy, who left school at 16 without a single qualification, has certainly come a long way. Last year’s Rich List placed him as the ninth wealthiest man in the UK, with a personal fortune of almost £5bn. He might be as flash and wide as they come, but he’s also charismatic, incredibly sharp and fiercely intelligent, particularly when it comes to sizing up a business and working out its operational needs and exit potential.
His reputation as a retailer is arguably second only to his renown for striking remarkable deals. Famously, in 2005, he paid himself a £1.2bn dividend from Arcadia, the retailer he had bought in 2002 with only a few million pounds of his own money. He can identify a target in hours, secure billions of pounds worth of funding in days and be exiting the business with multimillion pound profits in months.
While his detractors have levelled accusations of asset stripping at him, he vigorously denies his deal-making nous makes him a one-man personification of private equity. “Throughout my career, I’ve always thought there was a fundamental difference between being efficient and being a cost-cutter,” he tells me.
We’re talking at Arcadia’s suitably flashy fifth-floor head office just off Oxford Street, where Green sits at the head of a glass-topped boardroom table, surrounded by glossy black furniture and sliding doors that give way to a wooden-decked balcony. From here, he can survey the world famous high street of which he controls a major slice. In fact, thanks to Arcadia, he runs 12% of the UK clothing retail market. His empire is the second largest in the sector, and he’s been close to owning the leader, Marks & Spencer, on more than one occasion. “Arcadia will probably go down as one of the best deals ever done in retail,” he says, at pains to emphasise it wasn’t “leveraged off the roof”, even if he only put £10m of equity into a deal that was to secure such colossal returns.
“This is very important,” he stresses. “We repaid and then refinanced. If I’d wanted to operate like a lot of people, we could have taken £2bn based on the multiples that people were borrowing – six, seven and eight times cashflow. When we did £1.2bn of dividend, that year the company made a £327m operating profit. We could have borrowed far more, but that’s never been my strategy. It’s always borrow, repay quickly and build the business.”
It’s hard to argue when you consider that six years on, Arcadia has added a quarter of a million square feet of selling space, employs 25% more people and has generated in excess of £2bn in EBITDA.
Green has also worked hard to develop each of Arcadia’s brands – including Topshop, Topman, Miss Selfridge, Dorothy Perkins, Burton, Evans and Wallis – in a distinctive way, with impressive results. “I like to think that Topshop is becoming a global brand,” he says. For once, Green is the master of understatement. Under his stewardship, the shop has revolutionised high-street retailing. The previously mediocre store is now a talisman of UK fashion, loved by teenagers, celebrities and fashion editors.
Going public
For a man with such natural flair, it’s surprising to hear he fell into retail almost by accident. Tellingly, though, when asked what job he’d do if he wasn’t a retailer, he struggles to think of one that interests him. “Who knows? A photographer,” he jokes, flashing a grin at the freelancer who’s busy taking pictures of our interview. “If you’ve got a natural talent, I think it’s fantastic. If I wasn’t in retail, being a singer or a tennis player would be a better idea.”
After leaving school, Green worked for the family firm, one of the first shoe importers to bring products in from China and Hong Kong. Exposure to international trade proved invaluable, and he says he’s grateful that the people who trained him taught him about finance, credit, importing and product. If he was to become interested in the more creative, product-buying side of the business, his understanding of the basic principles of retailing was instinctive. “There’s a difference between being a rag trader, in the politest sense, and a businessman that sells clothes,” he says.
His business philosophy, inspired by these early experiences, is direct, pragmatic and remarkably simple. “I’ve always understood how to buy merchandise and run my businesses efficiently,” he says, and countless suppliers will testify to his talent for driving a hard bargain. “Even now, in the toughest times we’ve known, there’s a finite number of levers you can pull in any business. After that, you’re in the swim.”
After four false starts (a compelling case for the ‘don’t give up’ mantra that’s drilled into budding entrepreneurs), Green made his first million at 33, with Jean Jeannie, a struggling fashion chain he bought for £65,000 in the mid-1980s. He sold it six months later for £3m. It was a neat piece of business, and one he’d repeat on a much larger scale on several occasions.
Before hitting his stride in the mid-1990s, Green was to have a bruising encounter with the machinations of public company life, as chairman and chief executive of discount retailer Amber Day. Like countless other entrepreneurs who have struggled to square owner-manager life with being the steward for other people’s money, Green didn’t get on with the City, and after an initial honeymoon period, profits collapsed in the early 1990s. Four years of arguments and management disputes ended with Green’s resignation and a £1.1m payoff. He hasn’t run a public company since.