SIR Philip Green is focusing his retail empire on overseas growth after seeing his UK stores continue to struggle.
His Arcadia Group – which trades as Bhs, Burton, Dorothy Perkins, Evans, Topshop, Topman, Miss Selfridge and Wallis – is eyeing up overseas opportunities that could include acquisitions if the “right” deals come up.
The billionaire head of Britain’s largest privately-owned clothing retailer closed about 60 outlets during the year amid what he described as “challenging” trading conditions.
“It is our intention to continue to drive expansion strongly in both our USA-owned stores and in our international online business in the year ahead,” said Green, who declared in September that the struggling UK retail market had bottomed out.
“Trading conditions remain challenging, therefore exciting and engaging our customer across multi-channels is at the top of our agenda.”
Better stock management and less discounting overcame sluggish sales, pushing profits before tax and exceptional costs 25 per cent higher to £166.9m in the year to 25 August. Total group turnover edged lower to £2.68 billion.
Excluding new store openings, overall sales were 0.7 per cent lower, led by a 3.2 per cent decline across Arcadia’s 2,500 UK shops. During the first ten weeks of the new financial year, underlying group sales have increased by less than a percentage point, indicating further tough times ahead.
Arcadia opened 15 new stores during the year, including two US flagship sites in Chicago and Las Vegas. Meanwhile, 14 Topshop/Topman concessions opened in US department store chain Nordstrom.
In total, Arcadia operates 615 international franchised outlets across 39 countries. The group has online sales into 112 countries, with international commerce up by 33 per cent last year.
“Given the very challenging conditions both in the UK and around the world, we are pleased to report strong cash generation of £330m,” Green said.
“We have focused our efforts on being efficient in both stock management and delivering newness as regularly as possible, resulting in improved markdown and margin.”
Other retailers reporting yesterday included fashion chain French Connection, which is overhauling its UK and European business following a 9.5 per cent decline in sales in the first half of the year.
The situation appears to have stabilised in the third quarter, with revenues flat against the same period a year earlier. French Connection said it was helped by “more autumnal weather”, which boosted sales of coats and knitwear.
However, the group added that the market remained inconsistent. At the same time, progress in flogging off under-performing stores has been “slow” amid weak demand for retail space.
JD Sports posted a 1.5 per cent rise in sales during the three months to 20 November, with customers showing a clear preference for sport rather than fashion items. The company said it remains on track to deliver full-year profits in line with expectations, though much depends on Christmas sales.