Topshop owner Green around the gills as he warns profits to fall by a third

Sir Philip Green says Arcadia has had a tough few months. Which bodes badly for the rest of the sector, too...

by Emma Haslett
Last Updated: 21 Nov 2012
It’s a sign of the times when the UK’s 13th richest person is worrying about money. But Sir Philip Green, the man behind Arcadia (which owns everything from Topshop to Dorothy Perkins to BHS) has told senior staff that he’s expecting profits to ‘fall sharply’ when the company publishes its annual results at the end of the month. Apparently, profits at the company have dropped by a third, to £213m, on sales of £2.7bn. So it's been more than just the people from UK Uncut avoiding buying their black hoodies from Topshop, then...

According to Green, the lacklustre performance is down to a number of factors: to begin with, consumer spending has been hit by high inflation and the rise in VAT, while rising cotton prices haven’t done much good for his businesses, either. Increased competition has also hasn’t helped: Green told staff that the market ‘is as competitive as it has ever been’. But one of the most significant factors in Arcadia’s troubles was the icy weather over the Christmas period, which did the business some serious damage: Green reckons it cost him £40m.  

Analysts have been speculating for some time over whether he’ll take the opportunity of the downturn to increase the size of his empire by acquiring a rival. Although so far, he’s concentrated more on feverishly investing in the businesses he already owns: more than 20 BHS stores have been refurbished during the year – apparently delivering a double-digit growth in sales as a result. Green has also expanded Topshop into the US, opening one store in New York last year, with another one expected to launch in Chicago in September, while yet another will open in Las Vegas in March.

But with 2,500 outlets and 45,000 staff, analysts will anxiously be keeping an eye on Arcadia as an indicator of how its rivals will fare. Expect a slew of similar results from clothing retailers over the next few months…

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