LONDON— Sir Philip Green is poised to clean house at his Arcadia Group.
The owner of Topshop, Topman, and Miss Selfridge said he would be prepared to close up to 260 stores in Arcadia’s portfolio over the next three years if he fails to renegotiate expiring leases on more favorable terms.
“In a Doomsday scenario, over the next three years we could close 250 to 260 stores,” Green said during a conference call on Thursday following the publication of Arcadia’s 2010-11 financial results.
“As of now, we cannot be certain whether that will even happen — there is always a window to negotiate. And we are also opening stores — we’re not sitting idly by,” he said.
In the 2010-11 fiscal year, Arcadia closed 66 stores but also invested 113 million, or $181 million, in the brands, store openings, and refurbishments. The company owns 2,500 retail units.
Arcadia Group posted a loss of 122.9 million pounds, or $196.6 million, in the 12 months ended Aug. 27. The loss was due to exceptional items. Last year, Arcadia’s profits were 142.3 million pounds, or $227.7 million.
Arcadia said the 253 million pounds, or $405 million, in exceptional items, were linked to a clutch of underperforming stores throughout the country.
“Due to the difficult economic conditions, it has been necessary to provide for certain onerous leases within the store estate, and to impair certain fixed assets and goodwill,” the company said.
Stripping out the exceptional items and taxes for the year, Arcadia’s profits fell 37.5 percent to 133.1 million pounds, or $212.8 million.
Sales in the 12-month period fell 3.4 percent to 2.68 billion pounds, or $4.28 billion, from 2.78 billion pounds, or $4.45 billion. All dollar figures have been converted at average exchange rates for the period.
In a statement, Green said the company also shouldered a 1.8 percent margin loss, having decided to maintain its prices despite rising costs. “[We did not] pass on any increases to our customers. Costs have continued to be controlled tightly,” he stated.
Green added that trading conditions in the current fiscal year 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.”
Sales fell 4.4 percent for the first 12 weeks of the new financial year, while the Internet business was up 21 percent. He said the young fashion brands such as Topshop were trading “positively.”
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