Arcadia makes big losses, but talks up future potential

By

Sandra Halliday

Published
Sep 6, 2019

Arcadia has filed a new set of accounts at Companies House and it gives an insight into how bad trading has been at the business, with a swing to a loss last year. But it's talking up its growth focus for the future.

The company reported an operating loss of £138 million in the 53-week period, compared to profits of £119 million in the prior year.

That was despite turnover being down by ‘only’ 4.5% at £1.8 billion. But even the smallest sales dip can chip away at profits and with the environment having been extremely promotional, sales are often achieved at the expense of margins. EBITDA at the firm plummeted 40% to £78.3 million. 

The company described the period as a tough one and cited the ongoing challenges globally for retailers as a key factor in its nightmare year.

Since the period end, the group has pushed through seven CVA agreements for the different parts of the business empire with at least 23 stores in the UK and Ireland set to close, in addition to a number of closures that have already happened. Many of the stores that are staying open will benefit from radically reduced rents as well.

The company has also retreated from some key international operations with its US Topshop/Topman closures being the highest-profile example of this. But the group, which also owns Miss Selfridge, Dorothy Perkins, Wallis, Burton and Evans, said it has some of fashion’s strongest brands and is expressing confidence in its turnaround strategy.

Part of that is a drive to boost digital sales with deals being struck with big internet retailers including Very owner Shop Direct, Asos and Zalando. The company called out the Zalando deal as having “built a very substantial business across all of our brands, which continues to grow.”

It also said that it’s “looking forward to” expanding its brand presence on Next online to include both Topshop and Topman, in addition to its other brands that have seen a “strong launch through this channel” over the last year.

But physical retail isn't being neglected, especially abroad, and the company cited its “very strong partnership with Nordstrom, who are Topshop/Topman’s exclusive American retail partner and who also offer [the] product successfully online.”

In addition, at home, “the company is looking forward to investing in key stores within our more focused retail estate to ensure that we're able to continue to give our customers an exciting shopping experience on the high street.”

In the accounts statement, the company said: “After coming through a challenging year, we are now very clear on our strategic direction. Our stakeholders have supported us by voting in favour of the company voluntary arrangements which have reduced our cost base and given us a platform for the future. Our business and recovery plan is focused on our product, service, stores and maximising the potential of all the partners and channels that we are operating through.”