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Arcadia Swings to Profit

Sales slipped 0.1 percent in the year ended Aug. 25.

 

LONDON — Arcadia Group, parent of retail brands including Topshop, Topman and Dorothy Perkins, has swung back into profit, and its owner Sir Philip Green is sanguine about the long-term prospects for business — despite a challenging retail environment.

Profits at the privately held group climbed to 70.1 million pounds, or $110.8 million, in the year ended Aug. 25, despite broadly flat sales for the 12-month period. Last year, Arcadia posted a loss of 122.9 million pounds, or $194.2 million, due to exceptional items linked to a clutch of underperforming stores across the U.K.

Sales edged down 0.1 percent to 2.68 billion pounds, or $4.23 billion, due to a slowdown on the U.K. high street in particular. Arcadia said like-for-like sales were down 0.7 percent.

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On a brighter note, overall e-commerce sales grew 22 percent, while U.K. online sales climbed 20 percent. In the first 10 weeks of the current year, total like-for-like sales were up 0.7 percent compared with last year.

All figures have been converted at average exchange rates for the 12-month period.

“All has been pretty OK until the last couple of weeks when sales have been softer. But I can’t manage this business week-by-week,” said Green in a telephone interview. “And, to be honest, you can’t be up 20 percent online in the U.K. and not expect your store base to be affected.”

Green added that his total investment over the past 10 years since he bought Arcadia has been more than 1 billion pounds, or $1.59 billion at current exchange. He said it was a testament to his commitment to growing the business in good and bad times.

And while Green cited “very challenging conditions” both in the U.K. and around the world in Wednesday’s statement, he said international expansion would continue and that certain regions were flourishing.

In the U.S., he’ll be opening the first Topshop and Topman stores in Los Angeles on Feb. 14 and will be making a trip to Seattle in January to meet with Nordstrom, where Topshop has 14 in-store locations. Green said the collaboration is going well and he would like to expand at Nordstrom. Separately, he’s still looking to open a second Topshop location in Manhattan.

In the fiscal year just ended, Arcadia opened 15 stores, taking its total to 615 franchise outlets in 39 countries. With regard to e-commerce, Arcadia services 112 countries, including dedicated German, French and U.S. sites for the Topshop-Topman brands.

Green said the 13,000-square-foot Topshop-Topman store in Melbourne, Australia, which has been open for nearly a year, is on course to generate 15 million pounds, or $23.9 million, in annual sales. A newly opened store in Sydney is generating sales densities of 2,170 pounds, or $3,450, per square foot.

Arcadia is opening a Topshop-Topman unit on Thursday in Johannesburg — the first in South Africa, and a second one in Durban before Christmas.