Philip Greenâ€™s Topshop and Topman chains slumped to a Â£505m loss last year as sales fell and the retail tycoon wrote down the value of two of his flagship brands.
Sales at the fashion brands fell 9% to Â£846.8m in the year to 1 September as they struggled to compete with the likes of Asos, H&M and Primark. In the UK sales fell by 9.8%.
Write-offs relating to loss-making stores and the unwinding of the Ivy Park athleisure joint venture with BeyoncÃ© combined with the Â£161.3m write-off of inter-company debts to plunge Topshop/Topman to a Â£505m pre-tax loss, far ahead of the Â£3.8m loss the year before.
Topshop is the main business in Phillip Greenâ€™s Arcadia retail empire, which last week revealed dire figures. The revelation of poor performance at Arcadiaâ€™s biggest brand comes after Greenâ€™s holding company admitted there was â€œmaterial uncertaintyâ€ about its ability to continue trading without new funds, after slumping to a Â£177.3m loss last year â€“ including Topshopâ€™s poor performance..
The history of Arcadia Group
When Sir Philip Green bought Arcadia, the retail group behind brands such as Topshop and Wallis, for Â£850m in 2002 he was already known as the king of the UK high street.
Green made his fortune by breaking up Sears, the group which once owned the Freemans catalogue and Miss Selfridge, before buying BHS in 2000. He became a household name after his family collected a Â£1.2bn dividend from Arcadia in 2005, the biggest corporate payout in UK history.
But in 2006 Topshop supremo Jane Shepherdson, the woman who put the brand on the fashion A-list, left amid rumours she was unhappy with Greenâ€™s management style. Her exit came just as Topshop teamed up with Kate Moss.
The Croydon-born model helped front Topshopâ€™s expansion into the US in 2009 where Green pledged to build a billion-dollar business. Three years later US private equity firm Leonard Green bought a 25% stake in Topshop for a reported Â£350m.
Topshop and Arcadiaâ€™s other brands were slow to adapt to online shopping, however, and faced increasing competition from cheaper rivals, including Asos, H&M and Primark. AS sales fell, the groupâ€™s pension deficit rose. The collapse of BHS in 2016, shortly after Green had sold it to a serial bankrupt for Â£1, also dented his reputation.
Arcadia recently bought back Leonard Greenâ€™s stake in Topshop for virtually nothing. The group warned it could collapse if landlords did not back a rescue plan involving closing 50 stores and rent cuts. The plan was approved after landlords were promised a 20% stake in any sale of the business. The Green family also pledged to pump Â£100m into the groupâ€™s ailing pension scheme.
Taveta Investments, the owner of Arcadia Group, which is the parent of high street brands including Miss Selfridge, Wallis and Evans, said difficulties refinancing a Â£310m loan on Topshopâ€™s Oxford Street store, due to expire in December, could mean it would have to raise new funds.
Greenâ€™s retail empire staved off collapse in June after winning backing from creditors for a rescue plan that involved the closure of about 50 stores, 1,000 redundancies and rent cuts of up to 50%.
Accounts filed at Companies House on Thursday show the scale of the problems for Topshop and Topman. Sales fell by early 16% in the US, where Topshopâ€™s stores are now closed after being put into administration. Even before those closures, the accounts reveal that the chains employed about 900 fewer staff.