Green eyes move into food as retail sales slip

Sir Philip Green, pictured with Rolling Stone Ronnie Woods wife Sally Humphrey at a Bafta event in Los Angeles. Picture: Getty Images

The development comes as the Arcadia retail empire, which also includes Topshop, looks to return to growth after it yesterday reported a drop in annual sales growth and a worsening in recent trading due to the mild autumn weather.

The possible launch as early as January of food sections in BHS stores – many of which already have planning permission to sell food – comes as supermarket chains continue to invest heavily in smaller convenience sites.

Arcadia, which also owns high street brands including Burton, Dorothy Perkins and Miss Selfridge, suffered a 3.7 per cent drop in comparable store sales in the first ten weeks of its latest financial year, after falling 2.7 per cent in the 12 months to 31 August.

Green said “trading conditions remain challenging”, with the results marking the second year of declining sales.

Underlying pre-tax profits edged 0.5 per cent higher to £167.8 million, but adjusted earnings fell 2 per cent to £220.9m.

Arcadia did not pay a dividend for the eighth year running, with the last payout being in 2005, when Green banked a £1.2 billion windfall.

The full-year figures came amid speculation over takeover interest in Green’s struggling department store chain BHS.

Overseas suitors are reportedly circling BHS, with potential bidders said to include Christo Wiese, who is South Africa’s third-richest man with a fortune estimated at £2bn, US private equity firm Apollo and a number of retail turnaround firms.

“If something turned up that made some sense we’d have a look at it. Why would we not? We’re in business,” Green said.

But he added : “We’re not talking to anybody.”

BHS has been weighed down by expensive leases and a pension fund deficit, although it is still a force on the high street with 180 stores and annual sales of £700m.

Arcadia said it was continuing to drive overseas expansion, with a further 161 new stores planned over the year ahead after 127 franchise shops opened in 2012-13.

Its Topshop/Topman brand has been increasing its presence in the United States, following Green’s move last year to sell a 25 per cent stake in the chains to American private equity firm Leonard Green & Partners for £350m, valuing the businesses at £2bn.

Green said he had been “collaborating closely” with the investor and now has four fully-owned Topshop/Topman stores in the US, with more in the pipeline.

Meanwhile, figures from the Office for National Statistics (ONS) yesterday showed the high street suffered a slump in October with a surprise 0.7 per cent fall in retail sales compared with the previous month.

Price increases slowed but it was not enough to prevent the decline in volumes. It was a worse than expected performance, as analysts had been expecting sales to be flat.

The figures stoked fears that retail will drag down overall growth for the economy in the current quarter.

The figures from the Office for National Statistics (ONS) showed non-food sales falling 1.3 per cent by volume.

Within this, textile, clothing and footwear stores saw volumes drop by 2.8 per cent.

Household goods stores saw a 1.2 per cent fall, despite the pick-up in the housing market.