British retailer Philip Green suffered a sharp drop in net profits at the Irish unit of his Arcadia fashion empire as its big-name brands came under pressure from new arrivals such as H&M and Zara, writes Arthur Beesley, Senior Business Correspondent
Accounts signed off within the past month show that Mr Green's company Arcadia Group Multiples (Ireland) Ltd, which has 101 outlets in the Republic, saw its net profit fall by 8.8 per cent to £11.52 million (€16.66 million) in the year to August.
Mr Green is best known for his unsuccessful attempt to buy out Marks & Spencer two years ago. His group owns the Burton, Wallis, Evans, Dorothy Perkins, Miss Selfridge, Topman and Topshop fashion brands.
It does not separate the sum for gross profit and pretax profit in its accounts and it does not reveal its operating profit.
Denominated in sterling, the accounts say that the "gross profit and profit before taxation" rose to £13.16 million in the year to August 2005 from £12.63 million a year earlier. The taxation charge increased in same period to £1.64 million from £2,000.
While retailers in the Irish market generally have been big beneficiaries of the spending boom, the latest filing for Arcadia show that its sales were static in each of the last three years.
Turnover excluding value added tax in the year to August 2005 was £52.54 million, virtually unchanged from the £52.21 million in the previous year. In the year to August 2003, turnover was £52.19 million.
The drop in net profits to £11.51 million from £12.63 million in the year to August 2004 meant that the group's net profit margin fell by more than two basis points in the most recent year to 21.91 per cent from 24.17 per cent.
An Arcadia spokeswoman in London declined to comment on the drop in net profits or on current trading conditions. However, the directors' report with the accounts said that "the company's trading has been satisfactory and the directors expect this situation to continue for the foreseeable future".
Arcadia's brands are aimed at different strands of the fashion market for women and men. It currently has 51 stand-alone stores in the Republic and 51 "concession" shops in department stores and other outlets.
Though long-established in the Irish market, Arcadia has faced fresh competition here in the last two years since the arrival of the Swedish group H&M and Zara of Spain, which also owns the Bershka, Massimo Dutti and Pull & Bear brands.
In response to the growth in Dublin of its rivals, Arcadia paid a premium of €3 million last year to buy out a lease held by furniture retailer Habitat at its former store at St Stephen's Green, Dublin. The retailer agreed to pay annual rents of more than €1.5 million on the three trading floors of 2,145 sq m in the building, giving it a presence near the Luas terminus at the top of Grafton Street.
