LONDON — The collapse of BHS cost Sir Philip Green’s retail empire £26.4 million and declining sales at its High Street outlets, such as Topshop and Dorothy Perkins, led to writedowns of £100 million.
Accounts filed with Companies House this week show that Taveta Investments, the holding company for Sir Philip’s retail businesses, spent £26.4 million on “exceptional administration costs — including lease guarantee costs, legal and professional fees and redundancy costs,” related to the collapse of BHS and subsequent investigation into what went wrong.
Taveta Investments owned BHS until 2015 when the loss-making department store was sold for £1. However, various agreements with the chain’s buyer, Dominic Chappell, meant Arcadia (the operating company owned by Taveta) was not fully separated from BHS.
BHS subsequently collapsed in April 2016. An MPs report into its demise was highly critical of Sir Philip’s running of the company, as well as the conduct of Chappell. Sir Philip has consistently denied any wrongdoing.
The £26.4 million in costs comes on top of the £363 million that Sir Philip has personally agreed to spend funding the BHS pension scheme, which came close to collapse when BHS went under. The Sunday Times estimates that the declining value of Sir Philip and his wife Tina’s business interests have also cost the couple £433 million.
Representatives of Sir Philip did not respond to Business Insider’s request for comment in time for publication.
The BHS costs contributed to a jump in one-off costs for Taveta, which owns brands such as Topshop, Dorothy Perkins, and Miss Selfridge through Arcadia Group. Exceptional costs jumped from £12.2 million in 2015 to £129.1 million last year.
The huge jump was due largely to a rapid decline in the performance of its stores as UK consumers switch to online shopping and fashion spending declines more generally. Provisions to cover rents in loss-making stores jumped to £21.7 million, suggesting more stores are becoming loss-making, and the company wrote down the value of its assets by £80 million to reflect the declining performance of its stores.
Taveta’s board blame “on-going challenging global market conditions.” They write:
“The retail industry continues to experience a major period of change as customers become ever more selective and value conscious and advances in technology open up more diverse, fast-changing and complex sales channels. This is set against an economic environment of a continued slow recovery from a deep recession and the uncertainty caused by Brexit.”
The British Retail Consortium warned earlier this week that consumer spending in Britain is in “long-term decline” and UBS said earlier this year it is seeing a “dramatic reduction in consumer discretionary income and intention to spend.” Fashion is being hit particularly hard, with BDO’s High Street sales tracker showing a 3.9% in clothing sales in May.
Taveta bought Arcadia in 2002 for £850 million. The group performed well during the 2000s but has faltered in recent years. Taveta’s brands rely largely on a strong High Street presence and have struggled to adapt to the pace of digital-only rivals such as ASOS and Boohoo.
Sir Philip has reportedly invested £100 million into improving Arcadia’s digital operations and Taveta’s accounts show the number of retail outlets Arcadia’s brands trade from fell from 3,034 to 2,766 as the company reduces its physical footprint.
The accounts, which leaked in the press earlier this week, also confirmed a 16% fall in operating profit to £211 million and revenue flat at £2 billion.
Once exceptional items and discontinued operations are taking into account, Taveta made an operating profit of £82 million, down from £223.3 million in 2015. Pre-tax profit was £36.7 million, against £172.2 million in 2015.