UK: Arcadia puts on sales despite grim summer

Sir Philip Green reported a modest improvement in annual profits at his fashion empire Arcadia yesterday following "one of the worst 'non-summers' in many years", but opted against taking a dividend for the second year in a row.

Arcadia, whose high-street chains include Topshop, Burton and Miss Selfridge, saw operating profits edge up by 1.6 per cent to £293.3m in the year to 1 September. Like-for-like sales across the group increased 2.1 per cent as total sales grew by just over 5 per cent to £1.86bn.

Sir Philip said he believed this represented "a very creditable performance when set against a background of one of the worst 'non-summers' in many years". Many clothing retailers had to bring sales forward, slashing prices by as much as 70 per cent as consumers were put off buying summer wear.

The figures were released as the supermodel Kate Moss's latest collection for Topshop went on sale. Sir Philip said the previous collection had been selling very well, but added: "You can't just put someone's name on something, the product has got to be right. We are still learning about it." The ranges, which feature skinny jeans and sparkly dresses based on pieces from Kate's wardrobe, have proved popular with consumers, but have come under fire from fashion writers for lacking originality.

Sir Philip said he has chosen to put the money back into the business rather than take a dividend, and said his philosophy has always been to pay down debt. "Without being rude, I don't really need any money," he said. "I would rather put the money into the business at this time." The billionaire banked a £1.2bn windfall from Arcadia in 2005.

In the seven weeks since the beginning of the new financial year Arcadia, which has more than 2,000 outlets, has seen a 1 per cent increase in both like-for-like sales and trading margins. Sir Philip added that all the group's brands, which include Dorothy Perkins, Wallis, Evans and Outfit, were well-positioned for growth at home and overseas.

The group will open more than 300,000 sq ft of retailing space in the UK over the coming year, and open 70 more stores with international franchise partners.

The retailer also owns the Bhs department store chain, which this month announced a 3 per cent rise in operating profits to £50m in the year to 31 March.

Sir Philip added that rising interest rates and the credit crunch would have an impact on consumer spending in the run-up to Christmas, but it was difficult to say to what extent. But he said that "there will be Christmas business", adding that sales performance was dictated by "the shop environment and the product".

Asked about the Government's removal of capital gains tax (CGT) relief which will mean entrepreneurs will have to pay 18 per cent tax instead of the current 10 per cent from April next year, Sir Philip said the Government should instead have introduced a tax-free ceiling of up to £1m.