LONDON — A toxic stew of slowing business on the British high street, the sale of BHS and a pension fund drama ate away at revenues and profits at Sir Philip Green’s Taveta Investments in the year ended Aug. 27, 2016, according to the latest filing at Companies House.
Taveta is the parent of Green’s Arcadia retail group, which comprises fashion brands Topshop, Topman and Miss Selfridge and women’s clothing retailers such as Evans, Burton and Dorothy Perkins.
According to paperwork filed at Companies House, the official register of U.K. businesses, the group saw sales from continuing operations dip 2.5 percent to 2.02 billion pounds, or $2.91 billion, while profit plummeted 88 percent to 16.7 million pounds, or $24 million.
The company said the dip in sales reflected “ongoing challenging global market conditions,” although retail margin for the 12 months was up 0.3 percent on the previous period.
The group also incurred a raft of exceptional costs totaling 129.2 million pounds, or $186 million, related to fixed asset impairment, provisions for onerous leases, costs related to the closure of BHS and the related regulatory investigations that followed the sale.
Taveta specified that those write-downs were mostly non-cash. Cash write-downs totaled 13.1 million pounds, or $18.9 million. Taveta pointed out that it remains highly cash generative, and at Aug. 27 had a cash pile of 223.1 million pounds, or $321.3 million. Shareholders took no dividends for the 12-month period.
The company is not alone in watching sales and profits shrink. The big British high-street players such as Next, New Look and Marks & Spencer have been reporting shrinking or flatlining sales as consumers find themselves squeezed between rising inflation and zero wage growth.
“Clothing has become a less important part of the household budget,” Taveta said in the filing, adding that slow economic recovery from a longstanding recession and uncertainty around Brexit have knocked consumer confidence. It said the group is looking at ways to improve margin to offset the ongoing impact of the weaker sterling, a direct result of the Brexit referendum last June.
Taveta also referred to a period of “major change” as customers become ever more selective and value conscious at a time when digital channels and brands continue to grow. Although Green declined to comment on the results, The Sunday Times of London reported that Green has recruited McKinsey & Co. to advise on e-commerce as he seeks to make inroads internationally.
Earlier this year Green resolved a near yearlong drama over the hole in the BHS pension fund by promising to make a voluntary contribution of up to 363 million pounds, or $451 million.
Green sold the ailing retailer to Dominic Chappell, a twice-bankrupt former racecar driver with zero retail experience, for 1 pound, or $1.50, in March 2015. After trading for a brief period, BHS principals put the company into liquidation.
By the time BHS was wound down last spring, some 11,000 jobs were lost and 20,000 pensioners were left in limbo. The pension deficit had swelled to 571 million pounds, or $695 million, when BHS collapsed last year under Chappell.
Last year, Green and the new owners of BHS were the subject of a British parliamentary investigation and parliament voted to set plans in motion for Green to be stripped of his knighthood, although that did not happen.