ARCADIA Group, the retailer owned by billionaire Sir Philip Green, yesterday said it planned to close up to 260 stores over the next three years after announcing a big fall in profits.
The group, which owns fashion retail stores including Topshop, Miss Selfridge, and department store BHS, said it would not renew half of its 480 leases that are due to expire over the next three years.
Acradia’s pre-tax profit fell 38 per cent to £133.1m in the year to 27 August, down from £213.2m last time, after the group wrote-off more than £250m from expiring leases.
Total sales at its 3,100 outlets worldwide were down by 3.4 per cent while sales, were down 4.4 per cent for the first 12 weeks of the new financial year, which Green blamed on the warmest winter on record.
“It’s been the hottest October and November in history. Nobody can deal with that. Winter goods are tough,” he told reporters at his flagship Topshop store on London’s Oxford Street.
“It’s 13 degrees centigrade difference in temperature today than a year ago on the same day,” Green said,
Retailers such as Debenhams, Marks & Spencer and Green’s own BHS have been heavily discounting winter clothing over the last couple of weeks, offering savings of up to 40 per cent.
Green said he anticipated no let-up to the discounting before Christmas.
“How can it and why should it? Everybody’s trying to get out their winter goods,” he said.
Green (right) was positive that inflation would drop in 2012 but did not expect a material change in the UK consumer’s mood.
The entrepreneur, who bought BHS for £200m in 2000, Arcadia for £850m in 2002 and has twice tried and failed to buy Marks & Spencer, said his dealmaking days were not necessarily behind him, although nothing currently excited him.
Arcadia is one of the UK’s biggest private employers, with more than 44,000 staff in 2,507 stores. It also has 600 franchised outlets in 36 countries worldwide.
A second flagship US Topshop store was opened in Chicago in September and a third will follow in Las Vegas in March, with possibly Los Angeles to follow.
Green said he thought the overall Topshop business could double in size in four years and is keen to open in China in 2012. He said Topshop would open its own stores in China rather than franchises.
“Given the very challenging conditions both in the UK and around the world, I am pleased to report cash generation of £297m,” Green said. “We remain a strongly cash generative business, enabling us to continue to invest in all of our brands.
“We have invested £113m in the last financial year, bringing our total investment over the last five years to in excess of £550m.”