Sir Philip Green has warned that competition on the high street is “fiercer than ever” as underlying sales at his retail empire fell.
But pre-tax profits at Taveta Investments – the group that includes Topshop, Miss Selfridge, Dorothy Perkins, Wallis, Burton and Evans – rose 6.5% to £214.3m, not including £12.3m of one-off costs partly relating to international expansion.
Total sales rose nearly 2% to £2.07bn in the year to 29 August as the company opened five joint Topshop and Topman stores in the US and 77 franchise outlets worldwide, 34 of which were Topshop and Topman outlets. Green said it was “a robust performance in challenging times”. The group did not pay a dividend for the 10th year in a row. Sales at established stores were down 0.9%, while online sales rose by 23.9% worldwide.
Green said: “Competition is fiercer than ever. People can sit at home and decide where to shop and what to buy ... They are incessantly on gadgets and being pushed stuff in a constant barrage.”
The group had boosted profits by concentrating on business efficiency, he said. In response to changing shopping habits, Green has closed 86 UK stores after their leases expired, taking the total estate to 2,358 shops. But the group also opened 14 outlets in five Tesco stores in a trial scheme, putting Dorothy Perkins, Burton and Evans into the supermarket.
Green said the trial was going well and a decision on whether to open more stores within Tesco branches was likely to be taken early next year. He insisted that taking the brands into supermarkets would not damage their image. “Why would it when it’s the same customers walking through from Monday to Friday? It saves them going to the high street,” he said.
In the 10 weeks since the end of August, sales at the group’s established stores slid 2.3%, compared with the same period last year, as high street clothing chains including Marks & Spencer and John Lewis struggled to cope with a second year of unseasonably warm autumn weather. There was a lot of “underground” discounting going on across the high street, Green said, adding: “It’s OK, there are no disasters but the weather has had a significant impact.”
The group will participate in Black Friday, with Topshop promising “serious steals” on its website. Dorothy Perkins and Wallis are offering 30% off everything; Burton has the same discount on coats and jackets.
“It’s been pretty mild and nobody needed to buy outerwear. In the last couple of days we’ve seen double-digit increases, it’s that instant,” Green said. “People go out of the front door and realise they need a scarf or a hat or a coat. There was a big upturn this weekend.”
Topshop will be launching a new athletic streetwear brand with the singer Beyoncé next year. Parkwood Topshop Athletic, the 50-50 joint venture partnership will feature clothing, footwear and accessories for sport and dance.
Green said he hoped to take the Beyoncé range into up to 25 countries, including Australia and Canada as well as the US and mainland Europe. He admitted that the launch had been delayed by a few months, but said this was because the team wanted to ensure the technical aspects of the clothing had been fully tested.
Last year, BHS, which was sold to an almost unknown group of investors for £1 in March, made a cash loss of £21m. The new owners have since put several stores on the market and sought new tenants for the brand’s flagship store in Oxford Street, London.
Green said he was not looking to offload more brands and was not a “piecemeal seller” but would consider buying another brand if the right deal came along. “If it fitted and could add value then, why not?” he said.
