Arcadia, the parent company of many popular high street stores such as Top Shop, BHS, Burton, Dorothy Perkins, Wallis and Miss Selfridge, has announced that it will be closing up to 260 stores after seeing a 38% reduction in annual profits. The retail sector is still a long way from recovering from the global economic crisis and there is no sign of a let up any time soon.
Arcadia plans to allow store leases to run until their expiry. Arcadia has around 3,100 stores globally of which 2540 are in the UK and 580 are franchised stores spread across over 35 other countries, including a flagship Topshop store in New York.
Sales are down by around 4.4% this year across the board. Arcadia has around 450 leases due to expire in the next few years and so will be letting around half of these lapse. The shops making the biggest losses will be the ones that closed. Overall Arcadia has made a pre-tax loss of £253 million on sales of £2.6 billion.
“This is as tough as it’s going to be” ~ Sir Philip Green
Arcadia employs around 44,000 people in the UK and is one of the largest private employers in the country.
As if all time high unemployment and increasing costs of living are not enough to contend with, the unexpectedly warm weather has also been blamed on reduced sales. Usually October and November see sales in winter clothing increase, however this year the warm weather has kept people out of the stores. There may be a surge in sales of woolly jumpers and warm coats over the Christmas period, but so far the early signs are not promising.
Sir Philip Green., CEO of Arcadia, told the BBC that £53 million was “lost” as it decided not to pass on the VAT increase to its customers. They have already closed 60 stores this year. He hopes that there may be other opportunities in the future.
Sir Philip Green thinks that this will be another late Christmas for retailers with many shoppers looking for bargains in the sales rather than spending large amounts before Christmas.
Billionaire Sir Philip Green owns Arcadia through Taveta Investments Ltd.
More from the BBC: Arcadia set to close up to 260 stores as profits fall