Sales at Sir Philip Green’s Arcadia retail empire dropped below £2bn during 2017 when a surge in online transactions hit trade in its shops.
Turnover at Arcadia Group, which owns fashion brands including Topshop, Topman and Dorothy Perkins, fell 5.6% to £1.9bn, a decline of £113m.
“The retail environment remains highly competitive and challenging,” said Ian Grabiner. The Arcadia chief executive said online sales had jumped 11.5%. “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.”
Green’s retail empire continues to feel the aftershocks of the collapse in 2016 of BHS, which he sold to Dominic Chappell, a former bankrupt, for just £1 a year earlier.
The collapse of the department store chain would come back to haunt Green, who agreed to pump £363m into the BHS pension scheme after coming under intense scrutiny during a public postmortem led by MPs.
The BHS scandal, as well as the deteriorating financial performance of Arcadia, has taken a toll on the fortune controlled by Green’s Monaco-based wife, Tina. The couple’s wealth was marked down £787m to £2bn in the Sunday Times Rich List at the weekend. The Green family, who paid themselves £1.2bn in 2005, did not take a dividend in 2017.
Like other traditional retailers, Arcadia, which also owns the Evans and Wallis brands, is fighting for sales amid weak consumer confidence and fewer shopper visits. The competitive landscape has also intensified as no-frills chain Primark continues to expand in the UK and websites such as Boohoo and Asos suck sales out of the high street.
Accounts for Taveta Investments, the Green family company, showed a recovery in pre-tax profits at Arcadia after a disastrous 2016. They increased from £36.8m to £53.5m, a figure whittled down by £29m of exceptional charges.
In 2015 the retail group made a profit of £172.2m. In February Green denied he was in talks to sell Arcadia to the Chinese textiles firm Shandong Ruyi.
“While we have found headline sales and profits disappointing, we remain a strongly cash-generative business and had a positive net cash balance at the year end of £157.2m,” said Grabiner.
The accounts also showed that the deficit in the Arcadia pensions fund had come down from £427m in 2016 to £300m after the company increased its contributions and changed some of the assumptions used to calculate the deficit.
