Profits at fashion giant Arcadia will fall steeply this year, owner Sir Philip Green has told staff.

The tycoon expects Arcadia’s earnings to drop by as much as a third from last year’s £213m, the Daily Telegraph reported.

Last winter’s snowy weather in the run-up to Christmas cost Arcadia as much as £40m after it was left with more stock than usual in January when its Sale began.

However Arcadia has cut its debt. At the end of the current year – which falls at the close of this month – it will be £300m. The low level of debt has sparked speculation that Green may be planning to buy another retailer.

Despite the stores’ tough year, Arcadia’s online sales have risen substantially.

Green told staff in an email: “The market remains tough and will do so for some time. It is as competitive as it has ever been.”