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Arcadia details BHS blow to bottom line

The collapse of BHS combined with falling property values dragged down Arcadia Group’s pre-tax profit in the year to 27 August 2016, accounts filed at Companies House confirm.

Pre-tax profit plummeted by 79% year on year to £36.7m, according to the long-awaited accounts, which were filed by Arcadia’s parent company Taveta Investments and published on Wednesday evening.

This included legal fees, redundancy costs and lease guarantee costs relating to the collapse of BHS, which totalled £26.4m during the year. The group closed 307 concessions with BHS in this period.

Pre-tax profit was also affected by a one-off £81m write-down on the group’s property values and a £21.8m provision for onerous leases on loss-making stores.

Overall, exceptional charges for the year stood at £129.2m, up from £12.3m in 2015.

Taveta also posted a 17% drop in total turnover to £2bn, confirming figures leaked to the Sunday papers at the weekend. UK turnover tumbled by 22% to £1.7bn.

The group said the retail environment remained “very challenging” as competitors sought to “attract value-conscious customers using a variety of routes to market”.

It added: “Clothing has become a less important part of the household budget.”

The accounts also show that Taveta agreed to pay £50m each year for the following three years into the group’s pension schemes for staff and executives. This was designed to plug the pension deficit, which had leaped to £426.8m during the year, up from £189.6m in 2015.

Cash at bank and in hand was at £223m, dipping by 2.6% from £229m the year before.

Separate accounts filed for Arcadia’s flagship Topshop and Topman brands show that operating profit before exceptional items for the year ending 27 August 2016 declined by 12.8% to £118m, while total operating profit fell by 18.8% to £109.5m.

Total turnover slid marginally to £990.8m, down from £1bn, while in the UK it dipped by 1.3% to £895.7m.

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