Not even retail superpower Arcadia, owner of Topshop and Miss Selfridge, is immune to the current high street slowdown. Boss Sir Philip Green said today that the group recorded a 6% drop in profits for the year to September, while sales are apparently down 1.8% in the first seven weeks of its new financial year. What’s more, his chances of picking up a bargain in Iceland look increasingly remote – he told the BBC that although he was still interested in the assets owned by investment group Baugur, the chaotic political situation made a deal nigh-on impossible. And perhaps he’s got enough to worry about at the moment...
Across the Arcadia group, revenues were pretty flat at around £1.8bn, while operating profits fell 6.1% to £275m (it also managed to slash its tax bill by 70%, which is good news for Green but not for the cash-strapped Treasury). But the results of the individual stores were a mixed bag: Topshop, Miss Selfridge and (particularly) Topman had good years, but the ‘mainstream’ chains like Burton and Dorothy Perkins had a ‘more challenging time’. So although the fashionistas are still shopping, the rest of the populace appears to be cutting back.
Green is still sitting on a nice cash pile, however, hence his interest in taking advantage of Baugur’s recent woes by buying into some of its high street assets (which include the like of Oasis and Principles). But he said today that although he was still interested in doing a deal, it was still ‘a little bit too early’ because of Iceland’s ‘political issues’ – in other words, the fact that the country is teetering on the verge of bankruptcy makes things pretty complicated. Plus there’s the issue of whether it’s sensible to take on another 1,000 shops in the current environment...
Sir Philip, who once again won’t be taking a dividend (perhaps he hasn’t spent the £1bn he paid himself in 2005 yet), said that retailers were going to have work hard to keep their heads above water. ‘It’s going to be about old-fashioned shop-keepers, old-fashioned operators. This is going to be about knowing your business,’ he told the Today programme. He also had a pop at the banks, suggesting they’d been doling out loans too freely. Borrowing had become ‘too easy’, he said, suggesting the banks had made some ‘grave errors’. Presumably that doesn’t include the loans they made to him...
In today's bulletin:
Income gap shrinks - but for how long?
Green backs off Baugur as Arcadia slips
Brown's corporation tax headache
MT's Little Ray of Sunshine: The ten o'clock brainwave
'35 under 35' spawns its first business