Shares rise by 25 per cent as Arcadia cuts 300 jobs

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SHARES IN Arcadia, the Burtons, Top Shop and Dorothy Perkins stores chain, rose 25 per cent after the group announced 300 job cuts at group headquarters yesterday.

The market was also cheered by the news that like-for-like sales fell by only 1.9 per cent over the last half year including the Christmas period, which in the current economic climate is regarded as a good result.

The City had been primed to expect a sales fall of as much as 4 per cent after the disastrous performance from Marks & Spencer and Storehouse last week.

The market had also feared there were further shocks in store after last month's warning, which led City analysts to slash profits by 30 per cent.

"The market is very relieved that Arcadia is not another Marks & Spencer," one analyst said yesterday.

Nigel Hall, Arcadia's finance director said that, unlike some of its main high street competitors, Arcadia had not had to bring forward its sales and start discounting before Christmas: "To have come through the period we have with the figures we've had is something we are very pleased about," Mr Hall said.

"When Marks & Spencer, the biggest player in the clothing sector, is in distress, it is hugely disruptive."

Mr Hall added: "This has been the toughest Christmas trading season that anyone in this business can remember."

The job cuts and the recruitment freeze will cost Arcadia pounds 3.5m to implement but will result in savings of pounds 8m in a full year. The group said that although sales through high street outlets were down, home shopping - which includes sales of the Hawkshead and Racing Green brands - were up by 37 per cent while Internet sales are forecast to go above pounds 1m for the first time this year.

Arcadia shares closed up 30.5p at 167.5p.