Arcadia full-year results revealed: Sir Philip Green’s empire swings to massive loss

Sir Philip Green's Arcadia Group full-year results revealed: Topshop empire swings to massive loss
Arcadia Group had been impacted by reduced profitability from its bricks-and-mortar stores.
// Arcadia Group has filed its full-year results at Companies House, laying bare its financial turmoil
// Sir Philip Green’s retail empire records operating loss of £137.5m and pre-tax loss of £93.4m
// Arcadia’s turnover decreased 4.5% to £1.8m and EDITDA plunged 40% to £78m

Arcadia Group has swung to a full-year loss in both an operating and pre-tax basis as accounts filed at Companies House today laid bare the financial turmoil plaguing the firm.

For the 53-week period ending September 1, 2018, the Sir Philip Green-owned retail empire recorded an operating loss of £137.5 million, a stark contrast to the £119.3 million operating profit recorded the year prior.

Arcadia also booked a pre-tax loss of £93.4 million for the same full-year period, compared to a pre-tax profit of £164.5 million in 2017.

EBITDA plunged 40 per cent year-on-year, dropping from £137 million in 2017 to £76 million in the latest full-year results.

The retail giant also saw turnover drop by 4.5 per cent year-on-year to £1.8 billion, which it attributed to “the ongoing challenge global market conditions for retailers”.

Meanwhile, Arcadia’s holding company Taveta Investments reported a loss of £177.3 million, compared to a profit of £49.4 million posted in the previous year.

The firm said it had incurred £217.1 million of exceptional costs, which meant it swung to a loss despite making a profit on an underlying basis.

Arcadia said it had been impacted by reduced profitability from its bricks-and-mortar stores, and that it was not possible to reduce store costs when in-store sales were declining simultaneously.

“The retail landscape has changed dramatically over recent years and the increased competition from the high street and online retailers in particular has had a significant impact on our performance,” Arcadia said.

Earlier this year, creditors to Arcadia approved of seven CVAs that will involve mass store closures, rent bills slashed, as well as job cuts to help revive the business back to profitability.

This will comprise a total of 48 store closures in the UK and Ireland, plus 11 Topshop stores in the US.

It’s estimated that around 1000 jobs are at risk as a result of the CVAs.

The documents filed today also confirmed the £310 million remortgaging of the Topshop flagship store on London’s Oxford Street and the sub-let of its adjoining Miss Selfridge store to Vans.

Arcadia insisted that it had “some of the strongest brands in the fashion market” and that it was confident it would deliver on its business recovery plan while improving the way it works and operates.

The company also highlighted that it opened a new distribution centre in Daventry, that it continued to invest in its digital and online division, and that it wanted to expand into new territories with appropriate wholesale partners.

Other documents filed at Companies House in the past week confirmed that Arcadia’s interim chairman Jamie Drummond Smith resigned on the same day as chief operating officer David Shepherd.

Drummond Smith was hired on an interim basis in April and Arcadia said his decision to step down was “expected”, given the recent approval of its CVA restructuring deal.

Meanwhile, Arcadia has denied reports that it was looking to split into separate brands ahead of a possible sale.

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