Green doubles Arcadia profits and adds £1bn to his fortune

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The Independent Online

Philip Green, the retail entrepreneur, has in effect added about £1bn to his personal fortune after saying yesterday that profits had almost doubled at his Arcadia shopping empire.

Mr Green, who made his first £1bn turning round the department store group Bhs, said operating profit at the Dorothy Perkins to Burton group he acquired last year for £850m had risen to £227.9m in the year to 30 August, from £116.4m.

He said the growth had come from "better buying, improving merchandising, better stock turnover and some like-for-like sales", adding: "It was a combination of pulling a lot of different levers to make the business run more efficiently." Valuations of Arcadia under his ownership range as high as £2bn.

The star of the group, home to a hotchpotch of high street brands, was Topshop, the cheap but chic womenswear retailer, which saw underlying sales soar by 10.6 per cent last year. Mr Green said all eight chains had a future home within Arcadia, despite admitting that like-for-like sales at Miss Selfridge, another womenswear chain, had fallen by 6 per cent.

Mr Green, whose purchase of Arcadia means he sells more women's clothing than any other British retailer, said he had repaid almost £580m of the £807m of acquisition finance he raised to buy the group. This reduced net bank debt to £225m after accounting for £175m of cash the company had at the end of August, he said.

But the group owes a further £227m, which it raised by remortaging a number of sites, including Arcadia's flagship store at Oxford Circus in London, home to the Nike Town outlet as well as Topshop and Topman. This helps to raise the company's statutory net debt level to £480m. Arcadia had net cash of £50m when it was acquired by Mr Green.

Mr Green's speedy debt repayment - he anticipates being debt free by 2005, three years before his facilities run out - sparked speculation within the City that he was aiming to curry favour with financial institutions before another raid on the high street. But Mr Green denied this, saying: "I am not looking at anything at the moment."

Although the entrepreneur is officially still weighing up a bid for Safeway, few in the City believe he poses much of a threat to Wm Morrison, the only group cleared to bid for the struggling supermarket chain. Yesterday he declined to comment on his plans for Safeway.

Arcadia, also home to Burton, Dorothy Perkins, Wallis, Evans and Outfit, provided further evidence that life was getting tougher for retailers. It said group like-for-like sales in the seven weeks to 18 October had risen by just 1 per cent, down from the 2.5 per cent growth reported for the year to 31 August. But Mr Green predicted Christmas "will be okay".

Since taking over Arcadia, which employs 24,000 people, Mr Green has given each of its various store chains its own brand director, supported by a finance, human resources and operations director. The brands' focus on terminal stock and putting more stock through their stores more quickly had led to improved mark-downs and margins, the company said. The gross merchandise margin rose 2.6 percentage points last year, while the operating margin was 5.9 percentage points stronger at 12.5 per cent.

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