Arcadia’s future lies in fewer, bigger stores, Sir Philip Green said this week as he revealed that profits at his fashion group have increased despite the recession.
Revealing a 13% jump in pre-tax profits to £213.6m in the year to August 29, Green told Retail Week that the merger of Bhs into Arcadia Group created the opportunity to consolidate the presence of his brands in many towns and reduce the group’s rent bill.
“We’re going to reshape the portfolio,” he said. “We will end up with less stores but more space.” The tycoon said the group has leases expiring on about 300 stores in the next two to three years.
Green intends to accelerate the roll-out of brands such as Wallis, Evans and Burton into Bhs stores, and wants about 100 completed by March. In some cases, this will allow small stores occupied by individual Arcadia brands to be closed.
He said that reshaping Bhs was more attractive than making acquisitions in the current market. “The potential of adjusting the mix at Bhs and using the bigger space is the most interesting thing we’ve got on.”
Sales were up 2.7% to £1.9bn on flat like-for-likes. Green said he was happy with the year, particularly in the light of the recession and a very tough first quarter last autumn. “This is a good performance. If you consider where we were a year ago, we didn’t know where we were going to land,” he said.
In the first seven weeks of the new year like-for-likes were up 2.3%. Again, the top performers were young fashion brands Topshop, Topman and Miss Selfridge, while the more mature brands fared less well. “Mainstream’s tough,” Green said. The figures do not include Bhs, which joined the group in July.
Ian Grabiner, who as chief operating officer has managed the integration of Bhs, becomes group chief executive.
Topshop’s New York flagship has performed above plan since opening, Green said. More US stores and entries into Italy, France and China are planned.
Green said that while he was “cautiously optimistic” about next year, the impact of the VAT rise on January 1, increasing unemployment and next year’s business rate rise, worried him. “You can’t not be concerned about it,” he said.