A woman holding an umbrella walks past the Topshop flagshop store in Oxford Circus as it opens for customers.Top Shop business continues after Sir Phillip Green Allegations, London, UK - 26 Oct 2018

LONDON — Topshop parent Arcadia Group swung into the red in 2018 with the company recording a loss of 114.4 million pounds as revenues shrank 4.5 percent to 1.82 billion pounds.

Arcadia, which is ultimately owned by Sir Philip Green and his wife Tina Green, had a bruising year due to declining profitability in stores, rising costs and lackluster sales.

In June, Arcadia narrowly avoided filing for bankruptcy after its creditors finally agreed to back a corporate restructuring plan put forward in late May.

The group’s disgruntled creditors voted in favor of seven proposed CVAs, or company voluntary arrangements. Creditors’ approval means that Arcadia is free to close stores, lay off workers, negotiate rent cuts and slash costs in a bid to return to profitability.

As reported, Arcadia said it has identified 23 out of its 566 U.K. and Irish trading locations for potential closure, and will ask for a reduction in rental costs and revised lease terms across 194 locations.

The stores set to close employ 520 people, and Arcadia said it would make every effort to redeploy affected employees within the business.

The remaining locations, including the Topshop/Topman flagship in Oxford Circus, will be unaffected by the proposals.

In the U.S., Arcadia plans to close all 11 of its Topshop/Topman stand-alone stores. As reported last month, the group reached an agreement with U.S. landlords, led by Vornado, who had challenged the ailing retailer over those closure plans.

Arcadia can now execute all its proposed CVAs in the U.S. and the U.K., a strategy that will involve putting the focus on wholesale, digital and marquee retail stores.

In the 53 weeks ended Sept. 1, 2018, Arcadia notched a 114.4 million pounds loss, compared with a 144.8 million pounds profit in the previous year.

Sales fell to 1.82 billion pounds from 1.91 billion pounds, while earnings before interest, taxes, depreciation and amortization shrank to 137.9 million pounds from 192.3 million pounds.

Cash in hand dwindled to 132.2 million pounds from 235.3 million pounds in the previous year.

The company’s directors, led by Ian Grabiner, Philip Green’s longtime right hand and Arcadia’s chief executive officer, put a brave face on the 2018 report, focusing on the changes they were making as part of the turnaround.

Their commentary on the 2018 results referred to the “dramatically changed” retail landscape and increased competition from high-street and online retailers.

They said the turnaround was focusing on “product, service, stores and maximizing the potential of all the partners and channels that we are operating through.”

They added that the company is also building on a “very strong partnership” with Nordstrom, Topshop/Topman’s exclusive retail partner in the U.S., which sells in physical stores and online.

The company also touted its “substantial business” with Zalando, which cuts across all of the Arcadia brands. Arcadia will also begin selling Topshop/Topman collections on Asos in the autumn.

Arcadia has also opened a new, 1.2 million-square-foot distribution center in Northamptonshire, England, which it said features state-of-the-art technology and automation. It has also re-launched its digital platform, the culmination of a two-year project.

An Arcadia spokesman also denied a report in The Sunday Times of London that Grabiner was unraveling back-office operations and shared services at Arcadia with an eye to spinning off some brands in the group’s portfolio.

“Following the formal completion of the CVA process last week, the board is now fully focused on implementing its turnaround plan across all its brands,” the spokesman said.

“The article in The Sunday Times is wholly inaccurate and unfounded. It was written without any attempt to contact the company or any of its advisers.”

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