Embattled Arcadia Group has reported an operating loss of £138m for the 53 weeks to 1 September 2018, admitting it could require additional financing to deliver its turnaround.
This is the first time in seven years that Sir Philip Green’s empire has reported a loss, falling into the red from a £199m profit in 2017. The retail group’s turnover for the period dipped 4.5% to £1.8bn, which it attributed to “the ongoing challenge global market conditions for retailers”. EBITDA decreased 40% to £78.3m.
Arcadia successfully passed seven company voluntary arrangments in June this year, to close 48 of its UK and Irish stores and slash rents across the remainder of its portfolio. The group’s brands comprise Topshop, Topman, Wallis, Burton, Dorothy Perkins, Evans, Miss Selfridge and Outfit. As part of the CVAs, Topshop and Topman’s retail operations in the USA were placed into administration.
The results published today confirmed the remortgaging of Topshop’s’ flagship Oxford Street store and the sub-let of its adjoining Miss Selfridge store to Vans.
However, it still admitted: “the risks identified around the refinancing of the 214 Oxford Street mortgage and on-going difficult trading conditions in a volatile retail sector could in certain circumstances cause the Group to require additional financing in order to provide sufficient liquidity to deliver the three-year business and recovery plan.”
The group’s majority shareholder, Lady Green, has already invested £100m of equity into the company, and agreed to fund the cost of the amended rental reductions within the CVA proposals.
During the period, the group opened its new distribution centre in Daventry and continued to invest in its digital web platform. It expressed interest to expand into new territories where appropriate with wholesale partners.
The group has denied reports that the business is splitting into separate brands ahead of a possible sale.