The fashion retail empire owned by Sir Philip Green has seen annual profits plummet thanks to a “challenging” environment on the UK high street.
Operating profits before goodwill, amortisation and exceptional items at Taveta Investments, the holding company behind Arcadia Group, plunged by 42 per cent from £215.2 million to £124.1 million for the year to August 26, 2017.
However, pre-tax profits rose 45 per cent to £53.5 million, thanks to lower exceptional costs.
Meanwhile, full-year total sales fell by 5.6 per cent from £2.01 billion down to £1.91 billion, and the company was slapped with a £29 million charge from fixed asset impairments.
The company had shuttered 41 stores once their leases expired and sought rent reductions on a further 25 thanks to tough market conditions on the high street.
Arcadia’s total store estate including concessions now stands at around 2800 worldwide.
Taveta chief executive Ian Grabiner said the 11.5 per cent growth on online helped to offset the “disappointing” sales and profits figures.
“The retail environment remains highly competitive and challenging,” he said.
“The increase in digital sales is taking place at the expense of traditional ‘bricks and mortar’ retailing, as consumers embrace the opportunity to purchase across all the channels available to them.
“Whilst we have found headline sales and profits disappointing, we remain a strongly cash generative business and had a positive net cash balance at year end of £157.2 million.”
Grabiner added that the business was continuing to invest in Arcadia’s distribution network, and planned to open a new distribution centre in Daventry next year.
Meanwhile, capital expenditure for the year came in at £124.9 million, up from £97.8 million the year before.
Taveta’s pension liability was also reduced by £126.8 million to £300 million after the group made contributions to the pension scheme.
Arcadia Group is the parent company of Topshop, Topman, Burton, Dorothy Perkins, Wallis, Miss Selfridge and Outfit.
Green himself has been the subject of much controversy for the past year or so, at one point being labeled as the “unacceptable face of capitalism” by MPs after the 2015 sale of BHS soon led to revelations of a £571 million pension black hole when it collapsed under its new owners a year later.
Green has since made a payment of £363 million towards BHS’s pension scheme after promising MPs he would “sort” its deficit.
The future of Arcadia Group was also thrown under doubt recently after rumours that Green was trying to sell the business to Chinese textiles firm Shandong Ruyi – a rumour that Green has vehemently denied.