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Arcadia improves margins to boost pre-tax profits

Arcadia has turned around from last year’s pre-tax loss to make a healthy pre-tax profit, despite sales dropping.

For the year to August 25, the parent company of Topshop, Topman, Evans and Miss Selfridge made a total pre-tax profit, after exceptional items, of £103.7m. This compares with a loss for the 2010/2011 financial year of just over £120m.

EBITDA rose from £297m to £330m.

Total group pre-tax profit before exceptional items rose to £166.9m, up £33.8m from last year. The financial statement said these exceptional items comprised “certain onerous leases within the store estate”.

The business has achieved this through improved margins, with turnover actually dropping from £2.683bn last year to £2.679bn.

Underlying UK retail like for like sales were down 3.2% on last year, with total like for likes down 0.7%. E-commerce showed strength, however, growing 22%.

Arcadia boss Sir Philip Green said he was pleased with the results, given the economic backdrop. “We have focused our efforts on being efficient in both stock management and delivering newness as regularly as possible, resulting in improved markdown and margin,” he added.

The business tycoon highlighted Arcadia’s international expansion – the retailer now operates in 39 countries, including Brazil, Australia and the US – as a major contributor to the figures.  Arcadia opens its first South African store tomorrow.

“It is our intention to continue to drive expansion strongly in both our USA owned stores and in our international on-line business in the year ahead,” Green said.

“Trading conditions remain challenging, therefore exciting and engaging our customer across multi-channels is at the top of our agenda. Product handwriting, quality and value are more important than ever.

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