Arcadia set to close up to 260 stores as profits fall

Arcadia, the owner of Top Shop and BhS, reported a 38% fall in annual profits to £133m and says it expects to close up to 260 stores in the next few years.

Arcadia boss Sir Philip Green told the BBC the closures would come as store leases came up for renewal.

It also reported same-store UK sales down by 1.8%.

The group, which owns Burton, Dorothy Perkins and Miss Selfridge, said it expected heavy discounts on the high street this Christmas.

Total sales at its 3,100 outlets worldwide were down by 3.4% and sales have worsened, falling 4.4% since the start of the new financial year.

Sir Philip told the BBC: "We have got - from my memory - 450 or 460 stores where leases expire in the next three years. And I think on our latest summary we will close more than half of those on lease expiry. So I would say, I would expect us to close 250, 260.

"Now, there may be other opportunities that turn up that we might want to open. But certainly, in terms of our existing portfolio, currently that's our thinking."

Sir Philip said he would attempt to renegotiate rent on these leases with the many landlords involved. The locations were across the UK, in towns that were no longer prime locations.

"In most of these locations, if we don't get more attractive terms, we don't want to stay," he said.

A total of 66 stores were closed in the past year.

'Financially aware'

Sir Philip said the warm weather had made trading difficult for many retailers: "It's been the hottest October and November in history. Nobody can deal with that. Winter goods are tough.

"Trading conditions remain extremely challenging, with style, quality and value at the top of our agenda and more important than ever."

He said the economic climate had heightened people's value of money: "I do believe everybody today is more financially aware than they've ever been in their life."

Sir Philip said the firm had decided not to pass on certain higher business costs and this had squeezed its profit margin by 1.8 percentage points, costing it £52.4m.

Chris Beauchamp, market analyst at IG Index, said the results highlighted a general problem for retailers: "Arcadia reminds everyone that the British consumer is still generally AWOL, with no likelihood of a quick return."

The billionaire's Arcadia group is one of the biggest private employers in Britain, with over 44,000 staff in its 2,500 UK stores.