Total UK sales, which include the Topshop chain, fell by 22%

Total UK sales, which include the Topshop chain, fell by 22%

Retail giant Arcadia saw its profits slump last year on the back of falling sales at its high street stores and the collapse of the BHS chain, which cost Sir Philip Green's retail empire GBP26.4m.

Accounts filed at Companies House show operating profit at holding company Taveta Investments fell from GBP252.9m (US$326.9m) to GBP211.2m in the year ended 27 August. Pre-tax profit fell to GBP36.7m, against GBP172.2m in 2015. The decline was a result of a GBP26.4m charge relating to the collapse of Green's former business BHS, whose stores included concessions from Arcadia chains such as Dorothy Perkings and Miss Selfridge.

"These [exceptional costs] relate to fixed asset impairment, provisions for onerous leases and costs related to the administration of BHS in the year, and subsequent regulatory investigations," Taveta said.

Green sold BHS for GBP1 in 2015 to Dominic Chappel-owned Retail Acquisitions (RAL), but failure to resolve BHS's GBP571m (US$749.3m) pension deficit was a major factor in the retailer's demise. In February, Green agreed to pay GBP363m to settle the pension scheme - significantly less than the GBP571m deficit the firm was left with when it fell into administration.

Sir Philip Green blamed for the collapse of BHS

The company also blamed ever more selective and value conscious customers, and a general decline in spending on clothing as a proportion of UK household budgets for the fall in earnings.

Total sales, meanwhile, dropped to GBP2.02bn in the 12 month period, from GBP2.07bn a year earlier; while total UK sales, which include the Topshop chain, fell by 22% to GBP1.73bn.

Group revenues, however, rose in Europe, the US and other overseas markets, helping to offset the declines on the UK high street.

"Market conditions remain challenging and very competitive, with new entrants across all channels, particularly in digital," the company explained in its filing. "UK unemployment remains low and consumer credit availability continues to rise. However, the slow growth in average earnings impacts the spending power of customers and consumers' spending profiles are changing.

"This, in addition to the ongoing volatility in currency markets, means the outlook is unclear. However, the group is looking at initiatives to improve margin to offset the ongoing impact of weaker sterling."