Philip Green pockets £460m dividend from Arcadia

Published on Friday 22 October 2004 02:36

RETAIL tycoon Philip Green and his family are to pocket a massive £460 million dividend for their 92 per cent stake in Arcadia, after the clothing retail group yesterday unwrapped a 30 per cent leap in full-year operating profits to £296.3m, compared with £227.9m the previous year.

The 40m balance in dividends will go to HBOS, the banking group that backed Green in the 850m purchase of the Top-Shop-to-Dorothy Perkins owner two years ago.

The massive dividend payout from Arcadia, which also includes the Burton and Miss Selfridge chains, follows a 40m payment in dividends from Green’s other main business, Bhs, last week.

Green also revealed yesterday that he was on the way to clearing the 808m debt he took on to buy Arcadia well ahead of a six-year schedule. He said by the end of this year that debt will have come down to 120m.

"This is retail history. We bought Arcadia just two years and five days ago. It’s the quickest payback ever," he said. It follows the recent news of a near-6-per-cent rise in Bhs full-year profits to 111.6m.

Green, one of the richest men in Britain with an estimated fortune of 3.6 billion, looks to have timed the announcement of the stunning results from Bhs and Arcadia to embarrass Marks & Spencer, whose board, led by former Arcadia chief executive Stuart Rose, rebuffed Green’s 9bn takeover approach this summer.

Today shareholders in M&S meet to approve a 2.3bn tender offer for shares, launched as part of Rose’s defence campaign. However, the price, to be unveiled next week, will be significantly lower than the 400p per share Green was prepared to pay three months ago.

Green said the performance of Arcadia and Bhs was despite the distraction of the M&S bid approach and said it "demonstrates that this is not a one-man band and it proves that we do not have to overpay or do anything".

During the year to 28 August Arcadia’s same-floorspace sales were down 0.8 per cent in what Green called challenging conditions. However, he said like-for-like sales in the first seven weeks of the new trading year were up 3.1 per cent.

Operating profit margins in the year jumped 4 percentage points from 13.9 per cent to 17.9 per cent, which City analysts said were among the best in the retailing business.