Profits at Sir Philip Green’s retail empire have dipped 3.4% as the billionaire’s loss-making Bhs chain slid further into the red.
Pretax profits for Arcadia’s parent group Taveta Investments, which also includes Topshop, Dorothy Perkins, Miss Selfridge, Wallis and Burton, fell to £189.3m in the year to 30 August despite a near 1% rise in sales to £2.7bn.
“BHS remains challenging … with this sector of retail continuing to be very tough,” Green said. Strong growth online at the chain helped deliver a 3.6% rise in underlying sales but profit margins slipped by 1% and losses widened to £21m from £19.3m last year.
Other parts of the group had a tricky year, with underlying sales up just 0.7% and profit margins down 0.3%, despite a strong performance at Dorothy Perkins and Wallis. But online sales rose 13.4% as Arcadia worked with 10 different international websites, including Germany’s Zalando and China’s Shangpin as well as selling via its own online stores.
Along with many other British high street fashion retailers, the group also endured a tough autumn with underlying sales down 1.2% in the 10 weeks from 10 August, with business affected by unseasonably mild and wet weather.
“The retail industry continues to be fast changing, as the number of channels through which customers choose to purchase and engage with us continually evolves, thus increasing the complexity of our operations, and our need for efficiency and speed to market,” Green said.
Green said he would spend £94.5m on new systems to support international development online and to refurbish Arcadia’s head office. He will also continue to review the UK store portfolio after closing 64 stores over the year, leaving the group with 2,311.
Expansion overseas is also on the cards. After selling a 25% stake in Topshop and Topman to Los Angeles-based private equity firm Leonard Green & Partners, Arcadia plans to open stores in Houston and Atlanta in the spring on top of its seven existing flagships and 107 concessions in Nordstrom department stores.
Topshop will also open a store in Amsterdam in February - its first wholly owned store in Continental Europe where, until now, the group has relied on department store outlets.
