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Jun 5, 2017
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Arcadia sales and profits fall, seeks new strategy to fight off e-tail revolution - reports

Published
Jun 5, 2017

Sales and profits at Arcadia fell in the year to last August, according to press reports, with the fashion retail giant having suffered the same squeeze that is being seen across the fashion retail market. The figures still show a group in fairly good health and investing for the future, but Arcadia is likely to be disappointed that its key retail brands are failing to drive its sales upwards when a few rival fashion retailers are managing to turn in good growth figures.


Topshop



Taveta Investments, the group’s holding company, controls chains including Topshop and Topman, Miss Selfridge, Evans, Wallis and Dorothy Perkins. While it saw operating profits falling 16% to £211m, sales fell only 2.5% in the 12-month period, it is believed. The sales dip is relatively small given the retail environment during the period to August 2016. And while the profits fall is much larger, it is reported to have been affected by the company pumping more money into its staff pension fund.

The figures, obtained by a number of UK newspapers, have not been confirmed and are not yet available at Companies House. But if correct, they reflect a business that has been dealing with the same pressures as many of its peers. Customers, particularly the young shoppers that patronise stores such as Topshop and Miss Selfridge, have been switching to pureplay online retailers like Asos, Boohoo and Missguided. Meanwhile consumers across the age range have been directing more of their discretionary spend towards leisure activities and away from fashion.

It has also been reported that Arcadia chief Sir Philip Green has called in cosultants from McKinsey to advise on strategy and how to fight back against the migration to online shopping.

Not that Arcadia has ignored the e-tail revolution so far. It has been investing heavily in positioning itself to deal with such fundamental shifts in the consumer landscape with greater investment in its online operations and also in growing its footprint outside of its core UK market. Its apparent willingness to potentially take over its franchised Australian Topshop business is one example of this. The failed business was not owned by Arcadia but could end up under the parent firm’s umbrella, with talks ongoing.

On the plus side, despite its lower sales, repots said the last year's accounts show Arcadia is cashflow-positive with about £223m available to it and its chains remain among the most popular on the high street.


Topshop



It would be unsurprising if management was satisfied-if-not-exactly-ecstatic about the sales and profit figures. And it’s clear that some chains in the group are over-performing. Wallis has reportedly been punching above its weight and its MD, Anne Secunda, being given extra responsibility as a result is evidence of this. She has been given the additional task of running plus-size chain Evans following the departure of its MD Fiona Ross.

The Secunda and Ross moves are just two of numerous management changes at the firm following some high level resignations. The highest profile of these was the departure of Arcadia veteran Mary Homer. She left last week to take on her new role as CEO of The White Company. The group is seeking an executive with an international reputation to run its star chain and the recruitment process is believed to be at the shortlist stage.

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