UK clothing retail giant Arcadia is
planning to close up to 260 high street stores over the next three years
after reporting a 38% dip in year-end profits.
"We've got 450 or 460 stores where leases expire in the next three years and... we will close more than half of those on lease expiry," confirmed Arcadia owner Sir Philip Green.
This year, in net terms, the retail group closed about 60 stores.
The move comes as Arcadia, which owns seven retail banners including value fashion retailer Top Shop and department store BhS, saw its UK same-store sales fall 1.8%, with total sales from its 3,107 stores worldwide falling 3.4% to £2.68bn, although internet sales jumped 21%.
Total sales have dipped further since the start of the new financial year, declining 4.4%, it admitted.
The group, which also owns the Burton, Dorothy Perkins, Miss Selfridge, Wallis and Evans brands, made a pre-tax profit of £133m ($207m) in the year to August.
Arcadia, which is owned by Sir Philip Green, said it had decided not to pass on certain higher business costs and this had squeezed its profit margin by 1.8 percentage points, costing £52.4m. “Costs have continued to be controlled tightly,” it said.
The retailer also said it generated “robust headline cash" of £297.4m, although that was down from last year’s £383.1m.
Sir Philip told the BBC: "Trading conditions 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."
Arcadia has 480 leases coming up for renewal in the next three years, and boss Sir Philip said he expected to close 200-300 of those.
However, Green said its young fashion brands Topshop, Topman and Miss Selfridge were “trading positively”.
Arcadia invested £112.8m into the business in the period, and ended with year-end bank debt of £444.5m.
“We remain a strongly cash generative business, enabling us to continue to invest in all of our brands,” said Green. “We have invested £113m in the last financial year, bringing our total investment over the last 5 years to in excess of £550m.
“We remain excited by our developing international business with 600 franchised outlets now operating in 36 countries, with 21 having been opened in the last year. Our second USA store opened in Chicago in September and our third in Las Vegas is due to launch in March 2012."
Green also told Reuters he is optimistic UK inflation will fall in 2012 but does not expect a material change in the UK consumer's mood.
"I don't see it getting any worse but I think where we are is people are much more constrained on a general basis by necessity," he said. "I do believe everybody today is more financially aware than they've ever been in their life."
He also said in the current tough environment retailers had to act quicker and be smarter: "You've just got to keep thinking outside the box. That's what we normally do and hopefully we'll have a couple of rabbits in our hat," he added.
"We've got 450 or 460 stores where leases expire in the next three years and... we will close more than half of those on lease expiry," confirmed Arcadia owner Sir Philip Green.
This year, in net terms, the retail group closed about 60 stores.
The move comes as Arcadia, which owns seven retail banners including value fashion retailer Top Shop and department store BhS, saw its UK same-store sales fall 1.8%, with total sales from its 3,107 stores worldwide falling 3.4% to £2.68bn, although internet sales jumped 21%.
Total sales have dipped further since the start of the new financial year, declining 4.4%, it admitted.
The group, which also owns the Burton, Dorothy Perkins, Miss Selfridge, Wallis and Evans brands, made a pre-tax profit of £133m ($207m) in the year to August.
Arcadia, which is owned by Sir Philip Green, said it had decided not to pass on certain higher business costs and this had squeezed its profit margin by 1.8 percentage points, costing £52.4m. “Costs have continued to be controlled tightly,” it said.
The retailer also said it generated “robust headline cash" of £297.4m, although that was down from last year’s £383.1m.
Sir Philip told the BBC: "Trading conditions 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."
Arcadia has 480 leases coming up for renewal in the next three years, and boss Sir Philip said he expected to close 200-300 of those.
However, Green said its young fashion brands Topshop, Topman and Miss Selfridge were “trading positively”.
Arcadia invested £112.8m into the business in the period, and ended with year-end bank debt of £444.5m.
“We remain a strongly cash generative business, enabling us to continue to invest in all of our brands,” said Green. “We have invested £113m in the last financial year, bringing our total investment over the last 5 years to in excess of £550m.
“We remain excited by our developing international business with 600 franchised outlets now operating in 36 countries, with 21 having been opened in the last year. Our second USA store opened in Chicago in September and our third in Las Vegas is due to launch in March 2012."
Green also told Reuters he is optimistic UK inflation will fall in 2012 but does not expect a material change in the UK consumer's mood.
"I don't see it getting any worse but I think where we are is people are much more constrained on a general basis by necessity," he said. "I do believe everybody today is more financially aware than they've ever been in their life."
He also said in the current tough environment retailers had to act quicker and be smarter: "You've just got to keep thinking outside the box. That's what we normally do and hopefully we'll have a couple of rabbits in our hat," he added.
