BHS costs hit earnings at Sir Philip Green's empire
Accounts for Taveta Investments – the holding company for Topshop, Miss Selfridge and Burton parent firm Arcadia – show that operating profit fell 16.5 per cent to £211.2 million in the year to 27 August.
• READ MORE: End of an era as final BHS stores close for good
Sales at Taveta dropped 2.5 per cent to just over £2 billion in the period, according to accounts filed at Companies House. The group also houses high street chains Dorothy Perkins, Evans and Wallis.
Taking into account exceptional costs, pre-tax profit plummeted to £36.8m from £172.2m. The figures include a £26.4m charge relating to BHS, while other one-off charges are linked to onerous leases on the group’s properties.
“These (exceptional costs) relate to fixed asset impairment, provisions for onerous leases and costs related to the administration of BHS in the year and subsequent regulatory investigations,” Taveta said.
Taveta said: “The retail industry continues to experience a period of major change as customers become ever more selective and value conscious and advances in technology open up more diverse, fast-changing and complex sales channels. Clothing has also become a less important part of the household budget.”
The company also pointed to Brexit for causing economic uncertainty and the collapse in the value of the pound following last year’s vote.
“The group’s financial performance is below prior year levels including a significant additional charge on its trading results through the deterioration of currency exchange rates.
“The group is looking at initiatives to improve margin to offset the ongoing impact of weaker sterling.”
It has been reported that Green has drafted in consultants McKinsey to boost Arcadia’s performance, with a focus on digital thought to be the billionaire’s prime focus.
BHS plunged into administration last year, impacting 11,000 jobs and around 19,000 pension holders, leaving a £571m pension deficit.
After a saga that included a parliamentary inquiry and public outcry over Green’s conduct, the tycoon agreed to pay £363m to settle the BHS pension scheme in February.
The Topshop owner was grilled by MPs over the sale of the chain, which he owned for 15 years before offloading it for £1 to former bankrupt Dominic Chappell in 2015.