Profit blow for Green as fashion sales hit buffers
Billionaire Topshop boss launches big staff shake-up to fight stores squeeze
PROFITS at billionaire Sir Philip Green’s fashion empire have fallen as the Topshop to Dorothy Perkins group battles tough high street trading and a fashion market squeeze.
His holding company Taveta Investments’ profits fell 16 per cent to £211 million, as sales slid 2.5 per cent in the year to the end of last August, according to figures obtained by The Mail on Sunday. The dip left total group sales hovering just above £2 billion.
The fortunes of Green’s 2,000-outlet group have been rocked by a painful year in which his former chain BHS collapsed and he was summoned before MPs in the probe that followed. The performance will pile pressure on Green who is keen to draw a line under a troubled period, which began with the sale of BHS to former bankrupt businessman Dominic Chappell in 2015 for £1.
But the slide also reflects the wider squeeze on High Street fashion groups. At Marks & Spencer restructuring costs saw profit plunge 60 per cent to £176million in the year to March. Profit at clothing business Next also fell for the first time in eight years amid rising online competition and as shoppers cut back on clothes spending.
Green has triggered a reorganisation of the business, whose performance has been greeted at board level as solid amid the unprecedented market conditions. The sweeping changes include the promotion of key talent and efforts to plug the gaps left by departures. Responsibility for the Burton chain has been awarded to long-serving Dorothy Perkins boss Malcolm Storey. Meanwhile, Wallis managing director Anne Secunda, whose chain is understood to be outperforming the market, has also been given responsibility for plus-sized chain Evans.
The Mail on Sunday has also learnt that a shortlist has been drawn up in the search to replace well-regarded Topshop boss Mary Homer. Homer left on Friday to run home and fashion retailer The White Company.
Departures also include Evans boss Fiona Ross, Burton’s chief Wesley Taylor and Miss Selfridge creative director Yasmin Yusuf. As part of efforts to reengineer the business
contributions to the group staff pension have doubled to £50million, which has dented profits.
Green paid £363million to help plug the BHS pension deficit in February, from his own pocket.
The figures bear out his assertions that the business remains broadly healthy and cash rich. The group finished the year with a cash arsenal of £223 million, about the same as last year. No dividend has been paid.
Green is now priming his businesses for a major push, particularly online and overseas. The group invested almost £100 million during the year, taking investment over 10 years to around £1billion. The £211 million operating profit does not include one-off costs.
The final accounts will include a non-cash writedown to account for the declining value of stores and leases in some under-performing high streets, which is expected to knock pretax profits further.