Topshop losses balloon to £500m as sales tumble

The fashion chains, owned by Sir Philip Green, reported an eye-watering pre-tax loss of £505m in the year to September 1, 2018, compared to £3.8m the previous year. Sales across the two retailers tumbled 9% to £846.8m.

Documents filed at Companies House revealed that almost half of the loss was a result of a goodwill impairment of £245m – a non-cash writedown reflecting a fall in the value of intangible assets such as the power of the Topshop and Topman brands.

The businesses also booked £161m in charges relating to writing off company debt and rowing back from Ivy Park, the brand it launched in a joint venture with singer and actress Beyoncé.

Topshop has long been seen as the jewel in Green’s Arcadia empire, but the results laid bare the struggles it is facing on the high street amid fierce competition from the likes of H&M, Zara and Primark.

Just last week, Arcadia’s parent company Taveta Investments reported a loss of £177.3m for 2018. It admitted there was “material uncertainty” about its ability to continue trading due to difficulties refinancing a £310m loan on Topshop’s flagship Oxford street store. If the company is unable to do so before the loan’s expiry in December, it may need to raise new funds.

Topshop and Topman operate around 200 UK stores and 350 worldwide.

Arcadia, which also owns Dorothy Perkins, Miss Selfridge, Wallis, Evans and Burton, fended off collapse earlier this year when creditors voted in favour of its controversial company voluntary arrangement (CVA).

The group plans to close 48 stores and has secured rent reductions of up to 50% at dozens of other locations as it battles to revive its fortunes.

As part of those turnaround efforts, Topshop and Topman are bidding to grow their online presence. The brands have started selling on Asos and will launch on Next’s website later this year.

However, speculation is growing that Green will ultimately seek to break up the group and sell off some of the struggling retailers that are currently part of his stable.

Arcadia has refuted such claims, dismissing them as “wholly inaccurate and unfounded”.