Arcadia Group sees 40% slide in profitsThursday, 24 November 2011
"Trading conditions remain extremely challenging, with style, quality and value at the top of our agenda and more important than ever. Additionally, the warmest October and November on record have made Autumn trading much tougher," said Monaco-based Sir Philip Green. However, things seem to be better for the firm's young fashion brands Topshop, Topman and Miss Selfridge, which according to Green, were trading positively.
Total sales, from 2,507 owned stores and 600 franchised outlets in 36 countries, fell 3.4 percent to 2.683 billion pounds. E-commerce sales did, however, rise 27 percent. Sales at UK stores open over a year, including VAT sales tax, fell 1.8 percent, with the group badly hit by last December's heavy snow.
Margin fell 1.8 percentage points after the firm chose not to pass on cost increases to customers. That cost the group 52.4 million pounds. Like-for-like sales, including VAT, were down 4.4 percent in the first 12 weeks of the new financial year.
Britons have been feeling the pinch as disposable incomes are squeezed by rising prices, muted wage growth and government austerity measures, and as they worry about a stagnant housing market, job security, a fragile economic recovery and the euro zone debt crisis. Therefore, clothing retailer Arcadia plans to close up to 260 stores over the next three years, Sir Philip Green has told the BBC.
Arcadia generated cash of 297.4 million pounds during the year and cut its bank debt to 444.5 million pounds.
But for the sixth year running Green, whose family ranked thirteenth on the 2011 Sunday Times UK rich list with an estimated fortune of 4.2 billion pounds, did not pay himself a dividend. In 2005 Green geared up the business to pay his family a 1.2 billion pound dividend.