Topshop eyes China and India

Topshop may soon have standalone stores in China. With a challenging home market, Sir Philip Green has said he is looking to China and India to grow the Topshop and Topman brands. Green said Asia “has got to be on our radar”, and that it

 was a “fantastic opportunity for us”. Sir Philip said that although the group “had not tackled Asia yet”, he had been approached to enter its markets by a number of parties.

One such deal to enter India is thought to have been considered last year with the Tata group, but came to nothing.

Topshop has already opened in New York, and has signed a deal for a site in Chicago. Sir Philip said he had another “four to five” US locations under review and that he could sign deals for two to three more stores over the next few months.

Record performances from Topshop and Topman helped Arcadia increase pre-tax profit from £200.3m to £213.2m in the year to August 28. Total sales rose from £1.98bn to £2.78bn, according to the figures, from the accounts of Taveta Investments, Arcadia’s parent company.

Sales from UK stores open at least a year rose 1.3 per cent, comprising 1.5 per cent at Arcadia and 0.9 per cent at BHS. BHS’s profit figures were not split out. According to Sir Philip, the department store was “cash positive” and “around break even”. He said he was hopeful that the chain – into which other Arcadia brands are being injected, complicating its financial results – would “make money this year.”

At least 200 standalone Arcadia stores are expected to close over the next three years, reflecting the move to BHS concessions, as about 500 leases expire.

Bank debt for the group stood at £464.1m at the year end, compared with £610.4m a year earlier, after Arcadia generated £386.2m of cash.

Sir Philip said he expected debt to fall to £350m in January, which would mean £1bn of debt would have been paid down since 2005, when he took a £1.2bn dividend. He did not take a dividend for the year to August 28.

He said he had no intention of floating the business. “We will remain private, therefore we are in charge of our own destiny,” he said.

Sir Philip forecast tough conditions for the high street next year, amid value added tax and business rate increases, and higher cotton prices and wages.

Image: Kate Moss for Topshop AW10
Source: FT©