Real Business

In sentiments that will resonate with retail entrepreneurs across the UK, Sir Philip said the business’ underlying sales had been strong, given all of the factors weighing against it, but that increasingly onerous conditions had hit profits.

Arcadia, which runs about 2,500 UK shops and is one of the country’s biggest private sector employers with 44,000 staff, has been one of British retail’s glowing successes stories. Some £550m has been invested in the business over the last five years.

Yet same-store sales have fallen 1.8 per cent year-on-year while total sales slipped 4.4 per cent since the beginning of the business’ financial year. Sir Philip blamed unseasonably warm weather in October and November for a recent sharp shortfall in winter sales.

Over the next three years leases on 480 Arcadia outlets will come up for renewal and all “250-to-260” closures will come from these shops.

Speaking to the Telegraph newspaper, Sir Philip said: “It’s a tough market and we did not increase our prices so we had £50m-odd extra costs to absorb. Last Christmas we had the snow, plus pretty tough trading conditions throughout. We don’t want to run shops for a loss.”

But he had some solace for worried shop staff: “If you look at our internet business, that’s growing at 20 per cent, there’s a shift [from bricks and mortar shops to online] and rebalancing our mix is probably the right thing to be doing.”

He added that consumer attitudes had shifted and that shoppers were more price-conscious than ever before. “This is as tough as it’s going to get,” he said, “because it’s reached everybody at every level”.

Arcadia runs 3,100 shops worldwide and owns household brand names including Top Shop, Top Man, Burton, Dorothy Perkins, Wallis and Miss Selfridge.