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Green ditches dividend amid falling Arcadia profits. By Dan Martin

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26th Oct 2006
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Billionaire retailer Sir Philip Green will not take his usual bumper dividend this year after his fashion business saw pre-tax profits fall by 20%.

Results released by the Arcadia group, which includes Top Shop, Burton, Dorothy Perkins and Miss Selfridge, showed pre-tax profits dropped from £253m to £202.4m in the year to September.

The decline was a consequence of disappointing sales figures for the company. Although total sales were up 1.8%, the like-for-like figure, which excludes all new store openings, fell by 1.9%.

Last year, Sir Philip paid himself a £1.2bn dividend, the world's biggest ever. But following today's news he confirmed that this would not be the case in 2006.

Despite the figures however, the entrepreneur said he was pleased with the results.

"This represents a strong performance when set against a competitive retail market, significant investment in new space by our competitors, and underlying cost inflation for all retailers," he claimed. "Our operating margin at 16.7% is still among the best in the industry."

Sir Philip recently denied that his retail group is being squeezed by competition from established rivals such as Next and Marks & Spencer and younger competitors like discount fashion firm Primark.

Last month, in a blaze of publicity, Sir Philip announced the signing of supermodel Kate Moss by Top Shop to design a new clothing range. The company was dealt a blow when brand director Jane Shepardson resigned a few weeks later. She denied it was as a result of rivalry with Moss.

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Richard Murphy
By Richard Murphy
28th Oct 2006 11:49

The dividend could not be repeated
The company had negative retained reserves after last year's bumper dividend. You might get away with that once, but not twice.

I would suggest that the straightforward perception of the dividend as a payment to shareholders out of profit might need to be revised in this case. That particular, record breaking, dividend was somewhat more complex than that.

See my thoughts on this at http://www.taxresearch.org.uk/Blog/2006/06/19/sir-philip-green-the-rewards-of-tax-avoidance/

Richard Murphy
http://www.taxresearch.org.uk/blog/.

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