Topshop’s Green blames weather for shop closures
Topshop and Bhs boss sir Philip Green warns that 260 stores face the axe after a profits slump.
The high-profile head of the Arcadia group, today announced that the group has seen a nearly 40 per cent slide in profits because shops have chosen not to pass on increasing costs to customers. He said the company took a £53m hit to absorb prince increases.
He went on to blame the unseasonal autumn weather for holding down sales of winter clothes. “It’s been the hottest October and November in history. Nobody can deal with that. Winter goods are tough,” he said.
He told the BBC some Arcadia shop leases would be allowed to end, saying: “We have got – from my memory – 450 or 460 stores where the leases expire in the next three years. And I think on our latest summary we will close more than half of those on lease expiry. So I would say, I would expect us to close 250, 260.”
The retail group said that young fashion brands like Topshop were doing well, but the other parts of the group saw a decline.
It’s been the hottest October and November in history. Nobody can deal with that. Winter goods are tough. Sir Philip Green
The 2,507 Arcadia shops include Bhs, Burton and Evans and reported pre-tax profits of £133.1m, compared with £213.1m last year. The group is one of the biggest private employers in Britain, with over 44,000 staff. It also has 600 overseas franchised outlets in 36 countries.
The retail sector has been hit by the inflationary squeeze on household budgets as wages fail to rise to match higher prices. But Sir Philip says he thinks the market will stabilise: “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.”
The retail magnate is ranked 13th on the 2011 Sunday Times rich list ,with a family fortune of £4.2bn. He has been targeted by tax campaign group UK Uncut, who say he has deliberately tried to avoid paying hundreds of millions of pounds of UK tax by channelling billions from Arcadia into an offshore vehicle registered to his wife in Monaco.
Talking about the state of the UK economy he said retailers had to think smartly: “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.”
But the brand is not facing disaster. Green still has plans to increase the size of the Topshop business, which is moving into China next year. He said it will be directly owned shops, not a franchise: “I want to make the money, I’m not going to build a $500m or $500bn business for somebody else.”
Read more: Sir Philip Green: the ego in Arcadia