Topshop Owner's Profits Up Despite Sales Drop

Topshop to Dorothy Perkins owner Arcadia has posted a rise in annual profits despite falling sales as Sir Philip Green's retail empire faces "challenging times".

Pre-tax profits from "ordinary activities" rose 2% to £202m for the year to 29 August but like-for-like sales slipped 0.7% across the group, while underlying UK sales fell 0.9%.

Sales have since fallen further, with like-for-like revenues in the first 10 weeks of new financial year down 2.3% against the same period last year.

Sir Philip said it was a "robust performance in challenging times" for the group, which also includes the Topman, Wallis, Miss Selfridge, Evans and Burton brands.

Arcadia was buoyed by the international expansion of Topshop, which has been opening new outlets in the US. The results also benefit from the absence of the loss-making BHS department store which Sir Philip sold to buyout firm Retail Acquisitions in March.

Meanwhile the retail tycoon said a planned "global athletic streetwear brand" in partnership with Beyonce would be launched next spring.

Arcadia currently trades from 2,358 UK stores having closed 86 over the last year. Sir Philip said the group was continuing to review its UK property portfolio.

The group is testing a new format trading Dorothy Perkins, Burton and Evans brands with Tesco (Xetra: 852647 - news) , opening 14 outlets in five Tesco stores. Sir Philip said these had seen "very encouraging results to date".