The famous high street fashion retailer enjoys something of a cult following, but do recent reports of a slump in sales suggest Topshop is in trouble?


Cult status

Topshop enjoys something of a cult following. It is the only high-street brand to put on a regular show at London Fashion Week, and its collaborations with Kate Moss have also bolstered the cutting-edge fashion status of the brand.

Innovative designs

Topshop’s fashion ranges are often heralded by the fashion press for cleverly interpreting catwalk trends, and Topshop is considered one of the sector’s leaders in innovation.

Support for wider fashion industry

The retailer is a prominent supporter of the wider British fashion industry through initiatives such as the Next Generation talent scheme.

Tech innovations

Topshop has worked with tech companies to create attention-grabbing events.

For instance, it streamed photographs of the catwalk of London Fashion Week in the windows of its Oxford Street shop in February 2016.

Wide appeal

Topshop has mainstream appeal among a young fashion audience, although its core demographic is ABC1C2, 15- to 30-year-old females.

The retailer is constantly looking to broaden its brand appeal even further to reach out to a more affluent customer.

Private ownership and scale

Sir Philip Green is one of the most influential characters in retailing and, under his family’s private ownership, Arcadia – and Topshop in particular – has been able to develop without scrutiny from the City.

The young fashion brand has had access to additional funding following the acquisition of a 25% stake in Topshop/Topman by US-based private-equity company Leonard Green & Partners at the end of 2012. 

Extended offer

Topshop has extended its ranges from clothing into categories such as make-up, jewellery and bags in recent years to drive footfall and incremental sales. In 2016 it launched another high-profile collection of ‘athleisure’ clothing under the Ivy Park label developed in collaboration with Beyoncé.


Recent underperformance

Sales growth has slowed to fairly marginal levels at Topshop over the 2013/14 and 2014/15 financial years.

Profits also under pressure

Topshop was forced into extensive discounting to drive footfall over 2013/14 and this meant that profits came under huge pressure.

While margins strengthened in 2014/15 to 11.2%, pre-tax profit margins remained four and a half points below the exceptionally elevated levels recorded in 2012/13. 

Outdated group systems

The wider group has been operating with legacy IT systems and this has necessitated a three-year programme to replace these, reportedly costing some £50m.


International development

Although foreign coverage is extensive, the franchised basis means that overseas sales far from reflect the total scale of the business, accounting for just 10% of total sales in 2014/15.

Going forward, the increased commitment to opening company-owned stores for Topshop and Topman in key markets should drive increased international sales growth.

Increased investment

The injection of private equity funding to Topshop/Topman should help accelerate expansion, particularly overseas.

Extending appeal

While its pricing architecture positions it in the mid-market, Topshop is constantly looking to broaden its brand appeal and reach out to a more luxury consumer, as demonstrated by its £600 dress sold as part of 2014’s Kate Moss collection.

Cementing its design status, a selection of the pricier Kate Moss lines were sold – some exclusively – by luxury fashion etailer Net-a-Porter


Multichannel development is particularly pertinent to Topshop’s international development, enabling it to enhance coverage, both through dedicated sites as well as in partnership with third-party etailers such as Zalando across Europe, ShangPin in China and now in India.

There is also significant scope for further online growth at home.

More celebrity partnerships

Sir Philip Green has made a point of partnering with A-list celebrities to bring extra kudos to the Topshop brand.

Collaborations with Kate Moss have been a roaring success and Topshop took a big step further in this respect by forming a joint venture with singer Beyoncé to produce a “global athletic streetwear brand” which launched in spring 2016 under the Ivy Park label.

Keeping up with the Kardashians sisters Kendall and Kylie Jenner have also launched a capsule range of LA-inspired clothing for Topshop and management has said “we are actively researching partners globally for this exciting new business model”.

Changes to design department

The retailer has made a number of key changes to its product and design team this year to support its global expansion plans.

Former Topshop design director Jacqui Markham has been lured back from Asos to the newly created position of global design director and is working with creative director Kate Pheland on refocusing design and product development.  

Legacy systems being overhauled

Topshop stands to benefit from the three-year £50m programme currently under way across Arcadia to replace 15-year-old legacy supply chain systems with “best of breed” new systems to reduce costs and improve stock accuracy and visibility.

A key advantage for Topshop will be that the new systems will enable it to perform country-specific decision-making.

Switching of outlets

With Topshop performing better than Arcadia’s other brands, there is scope to continue the tactical switching of outlets between fascias both at home and abroad.


Increasing competition

Competition within the mainstream clothing market continues to intensify. The need to deliver consistently strong high-fashion lines to justify its higher-than-average prices is intense at Topshop.

It is now under severe pressure from lower-priced rivals, led by Primark, H&M and Zara, with profits seriously impacted in 2014 after it was forced to step up its promotions to drive footfall and encourage sales.

Economic issues

The increasingly promotional clothing retailing environment is showing no sign of let-up.

Challenges posed by group structure

Within a multi-fascia group, management faces the particular challenge of overseeing various brands at different stages of maturity, all of which will be competing for investment.

As the group’s star performer, Topshop would appear to have had the edge on this front for some time though. 

The BHS fallout

Sir Philip Green has been coming under intense scrutiny throughout 2016 and into 2017 relating to the sale and subsequent collapse of BHS.

This will not only be proving a distraction, but negative publicity could impact other parts of his empire – and Topshop more than most, given his close involvement with the brand. 

The analysis was compiled by Retail Week Prospect, an intelligence service offering insight and analysis on the UK’s retailers.