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Topshop owner Arcadia Group to ‘rebalance’ stores and internet

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Sir Philip Green said today that up to 275 of his Arcadia Group‘s stores, which include the Topshop , Miss Selfridge and BhS brands, could close in coming years as the company rebalances itself to reflect the new reality of growing ecommerce sales.

The news came as the company unveiled sales of £2.68bn in the 2010/2011 financial year, a drop of 4.3% on last year’s £2.8bn Pre-tax profits stood at £133.1m, down by 38% on last year’s £213.2m.

But while global sales were down by 4.3% in like-for-like terms, and by 1.8% in the UK alone, ecommerce sales grew by 27%. Green said that the results were “pretty good” given last year’s snow and the group’s decision not to raise prices.

The trend has continued into the current financial year. Arcadia Group said that in the first 12 weeks, year, like-for-like sales fell by 4.4%, while internet sales were up by 21%.

The company operates 2,507 owned stores worldwide while there are also 600 franchises. Leases on around 480 of those stores are due for renewal in the next two to three years. Between 250 and 275 of those would probably close, said Green, rather than run at a loss.

“If you look at our internet business it’s growing at 20%, there is a shift,” he said. “We have got more shops than anybody else and therefore rebalancing our mix is probably the right thing to be doing. I think this is as tough as it’s going to be – it’s reached everyone at every level. It’s not a small wave.”

Speaking to The Telegraph newspaper, Sir Philip said that consumer habits were changing. “People change their habits,” he said, adding: “Now there is a pattern, we’ve got a base and we have to build off that base.”

Chris Webster, VP head of consumer products and retail at Capgemini, agreed that shoppers were buying in different ways.

“We are still spending, but we’re being selective and this trend will be very apparent this Christmas,” he said. “Technology is evolving and so is the consumer. Gone are the days when we were limited to shopping just on the high-street and were at the mercy of the weather. Shoppers have become very savvy, out of both need and convenience – we’ll hunt down the best bargains online to get the most out of our Christmas budget, but also because we can, easily and conveniently.

“Retailers understand consumer behaviour and have adapted accordingly, embracing the opportunity devices such as smart phones and tablets offer them in connecting with potential customers.”

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