Green wary despite recovery at Bhs

Published on Thursday 4 October 2007 01:13

RETAIL tycoon Sir Philip Green warned it was too early to give a clean bill of health for the high street despite improving sales at clothing giant Bhs.

The private company has reported a 3 per cent rise in operating profit to 50 million for the year to 31 March, as sales rose 1.4 per cent to 872.5m. A fall in interest charges lifted pre-tax profits from 42.3m to 49.4m.

Although like-for-like sales fell by 1.5 per cent last year, the year to date has seen an improvement, remaining flat, but rising 3 per cent in the latest six weeks.

Green, one of Britain's richest men, with an estimated fortune of close to 5 billion, was positive about the rise but warned clear conclusions couldn't be drawn. It also emerged Green would draw no dividend payment from Bhs for the third year running, even though shareholder funds more than doubled in the year, from 48.9m to 111m.

He last paid himself a dividend from Bhs in 2004, when he reaped 40m. The following year, his family famously banked a 1.2bn dividend reward from their 92 per cent holding in Arcadia, the group that owns Top Shop.

"We haven't seen enough of the road yet... As a retailer you'd want to be cautious ... You need another month at least to get some sort of flavour of what it is going to be like for the year", said Green.

The recent improvement was put down to an improvement in the weather, with last month "slightly more seasonable" than September 2006, Green said.

Overall, the market continued to be tight, he added. "The market remains competitive and underlying cost growth continues to be challenging."

Major players from the high street have been struggling in recent months, blaming rising interest rates, debt-laden shoppers and one of the wettest summers on record for sluggish sales, hitting clothing sales in particular. Both department store chain Debenhams and Next have warned of tough conditions recently.

Bhs appears to have suffered earlier than the other clothing retailers and is now in recovery mode. In 2006, it reported a 54 per cent drop in operating profit to 48.5m, blaming mistakes in the womenswear division, which sent like-for-like sales down 7.1 per cent.

It is now part way through a refurbishment programme which is expected to cost 100m by the time it is completed. Green said sales from the 13 stores already refurbished had seen sales up 12 per cent, prompting the company to drive ahead with the pace of the work.

Bhs said bank debt had fallen to 61.8m, down from 115.2m last year. On electing not to pay himself a dividend, choosing to reinvest profits into the business, he added: "I don't need any money. I haven't spent the last lot yet."