Arcadia to sell more stores as it dives into the red

Arcadia Group, the Dorothy Perkins to Top Man retailer, yesterday increased its store closure programme as it reported losses for last year.

Arcadia Group, the Dorothy Perkins to Top Man retailer, yesterday increased its store closure programme as it reported losses for last year.

The company, which has been one of the worst performing European retail stocks over the past year, said: "This has been a difficult year and we are not satisfied with the results."

It declared a loss, before a hefty £144m restructuring charge, of £8.5m, for the year ended 26 August, down from a profit of £41.8m last time. There was no interim dividend and there will be no full-year payout.

While sales were up 28 per cent to £2.0bn, retail margins slipped from 3.7 per cent to 1.2 per cent in the period.

As part of a restructuring programme announced in April, known as BrandMax, Arcadia yesterday added 55 stores to those earmarked for sale, taking its outlet reduction target to 455. So far, 204 shops have been sold, with the rest due to go by February 2002. The sales will leave the company with its 12 brands operating from 1,200 stores.

Rowan Morgan, of Teather & Greenwood, said: "The amount of downsizing shows the scale of the problems. The middle market that they're in is taking a real beating. Arcadia will limp on. But, this performance has come when the economy is up - what happens if there's a downturn?"

Arcadia shares have dropped from 158.5p a year ago to close yesterday at 42p, up 2p. The stock traded as high as 508p two years ago. The company's current market value, at £79m, is less than a third of its £257m debt.

The company yesterday said it was encouraged by an improvement in the second half of the last financial year and first seven weeks of the current year. But Nigel Hall, finance director, said it was too early to tellwhether the stronger trading would be sustained in the run-up to Christmas.

"The last two Christmas periods have been very disappointing," he said. "We don't know how the consumer is going to behave in the next 10 weeks. We've had a couple of false dawns ... and we're trying not to over-egg this."

Mr Hall said the company should make a profit in the current year. He added that price deflation would continue, but at a reduced rate - prices were down by 8 per cent in the second half of last year. He expected that to halve this year.