Two days after his release from Elmley jail, Jonathan Aitken had finally broken cover to attend the Sunday service at his local Catholic church in Westminster. As he left his £1.5m, five-storey Georgian home in Lord North Street and strolled towards St Matthew’s in the winter sunshine, the snappers couldn’t believe their luck. Could it be that this time he was turning into Saint Jonathan?

For the waiting paparazzi, swapping cigarettes and shivering in the cold, it was the perfect photo-opportunity. As he left his £1.5m, five-storey Georgian home in Lord North Street and strolled towards St Matthew’s in the winter sunshine, the snappers couldn’t believe their luck. Looking relaxed in a long blue overcoat and jeans, the former entrepreneur turned Cabinet minister turned prisoner CB9298 appeared to be reinventing himself once again before their very eyes. For a company that has been built up, slimmed down and built up again via acquisition activity, it would prove a fitting finale.. For the waiting paparazzi, swapping cigarettes and shivering in the cold, it was the perfect photo-opportunity.

Two days after his release from Elmley jail, Jonathan Aitken had finally broken cover to attend the Sunday service at his local Catholic church in Westminster. “He always thinks he knows best and he doesn’t take criticism well. He takes it very personally,” one insider says.But any further slips are likely to force either management changes, or a bid. Also, they are all grouped together in the middle market, which is being squeezed by fashion chains like French Connection and Zara on one hand and discounters like Matalan on the other.Many feel that by buying those businesses, Arcadia turned itself into the new Sears, a lumbering, impossible-to-manage group, that has made itself a sitting duck for takeover.Analysts feel there is a management problem too. They say that following the departure of Terry Green (to run Debenhams) and Stuart Rose (to run Argos and now Booker), Arcadia has too few managers of sufficient seniority to stand up to Mr Hoerner when they think he is wrong.Mr Hoerner is an aggressive manager who fights his corner with a zeal likened to that of Margaret Thatcher. Mr Hoerner surprised the City last year when he acquired the Sears womenswear chains from Philip Green. The deal gave Arcadia Miss Selfridge, Wallis and Warehouse chains and a significant increase in its share of the UK clothing market.Unfortunately it gave Arcadia a huge managerial headache with 15 different formats, many of which are barely distinguishable.

Fund managers who subscribed to Burton’s rescue rights issues in 1991 and 1993 made a lot of money out of Mr Hoerner before the recent fall and they seem prepared to back him for now.The problem is that having dragged the group back from the brink then, he has now taken it back there. Now 61, the tough, fast-talking American has been chief executive of the company for eight years. He is still supported by many City institutions who credit him with rescuing Burton in the late 1980s when Sir Ralph Halpern’s grand expansion plans began to unravel. But this business is capable of being cash generative.”The company could be forced into a re-financing, or the sale of some of its most prized assets. These include the Top Shop corner site on London’s Oxford Street which could be worth £170m, or its stake in Zoom, its e-commerce business.Arcadia’s decline puts Mr Hoerner in a difficult position. Debts stand at £270m, and the company’s 2,100 stores (including concessions) are saddled with higher-than-average rents that leave the company exposed if sales fall.Arcadia has been close to breaching its banking covenants before, and this may become an issue again if the sales fall continues.

Nigel Hall, the company’s finance director, said: “There is a risk that if we took no action we would be in breach. Two years ago the shares stood at over 500p after the company had de-merged its Debenhams department store operation. Now they stand at 52p, after a 16 per cent decline yesterday In 1996-97 the Arcadia businesses recorded profits of £81m. Yesterday the company’s own stockbroker, Credit Suisse First Boston, downgraded his current year forecast to a £4m loss from a £15m profit expectations this year. We are going through a very tough time in a very difficult market and it is precisely at this time that you need a tried and tested management with a long track record of success.”Arcadia’s fall from grace has been rapid. However, Adam Broadbent, Arcadia’s chairman, publicly backed his beleaguered chief executive yesterday “There was never any question of John resigning. He got a great price out of Arcadia.”John Hoerner, Arcadia’s chief executive, has considered taking the company private though it is far from clear if he could secure the backing.

Other retail entrepreneurs are also monitoring the situation closely with the view to mounting a possible bid.There was talk that some of Arcadia’s major shareholders might use yesterday’s annual meeting to call for the removal of Mr Hoerner, who has run the group since 1992, when it was known as the Burton Group. Philip Green, who sold the Sears womenswear businesses to Arcadia for £150m last year, has contacted some of Arcadia’s institutional investors to assess their feelings about a sale which could value the enlarged group at little more than £100m. But Richard Hyman of Verdict Research, said Mr Green was unlikely to proceed: “He wouldn’t be able to sell it again. But this was outweighed by steep declines in some of the menswear formats such as Top Man, Burton Menswear and Principles for Men.The company is now regarded as a probable break-up target. “People must be looking at it after this announcement and with the share price down at these levels,” said one rival retailer “The business looks a complete shambles.”The vultures are already circling.