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Arcadia: A tale of two cities

Topman and Topshop are clearly driving growth at Arcadia. Catherine Neilan asks if the “recovery” of the other brands will be enough to get them back on top.

Sir Philip Green certainly seemed relaxed this morning, and with the results he has posted today who can blame him.

After last year’s dip, profits are up quite substantially (or, if you look at the bottom line after exceptional items, have been returned from last year’s loss into money-making once again). E-commerce is up. International growth is clearly strong.

But looking at the UK’s like-for-likes, the business is slightly behind the flat market. Profits have been bolstered by improving margins rather than sales – arguably just as valid a route to growth given the economic backdrop, but certainly not something that can be maintained over the long-term.

Green admits not all of his individual retailers are doing well – although he declined to break the figures down for Drapers’ benefit.

Still, from what he says, Topman appears to be far and away the strongest of his categories, with Green saying 2011/2012 was “the best year ever” for the menswear retailer.

Topshop he described as “doing fine”, and certainly one would expect it to be one of Arcadia’s strongest divisions. Miss Selfridge had “a good year”, Green said, although perhaps not as impressive as the other two.

The other brands – including Dorothy Perkins, Evans and BHS – are, however, “in recovery”.

These three have for some time failed to keep up with their stablemates.  Both Evans and BHS are undergoing something of a reinvention and fingers crossed it’s not too late for them to turn it around.

Green speaks of the “energy” new boss Richard Price has brought to the team and explains BHS is “in repair” after “a couple of bad years”.  

After years of looking tired, BHS’ new image is a welcome change, helping it score much higher on Drapers’ annual Hit or Miss.  Those in the know argue that the retailer is a drain on Arcadia’s resources, but it’s clear that Green remains committed.

Insiders also put Evans down as a liability, and it is thought the two combined are the reason Arcadia’s turnover isn’t stronger. Green says the product – which last year was “off” – has been reinvigorated and store refits are refreshing the look. Yet again he’s not giving up.   

Despite the downsizing of stores, it’s heartening to know that these retailers are not disappearing completely from the high street. But they need the same attention to product, merchandising and freshness that the top brands get if they are going to become genuine competitors once more.

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