Green: ‘I am worth £1bn pay’
Philip Green defended his stunning £1.2bn dividend payment from Arcadia Group telling City A.M: “Venture capitalists would take much more.”
In a day dominated by retail news, Green earned the biggest headlines. Arcadia — which owns Top Shop, Dorothy Perkins, Wallis, Etam and Miss Selfridge — reported a 6.8 per cent rise in sales to nearly £1.8bn in the year ending in August. That implies a like-for-like increase of 1.3 per cent, according to Richard Ratner of Seymour Pierce. Operating profits jumped 10.1 per cent to £326m, while pre-tax profits advanced 2.6 per cent to £269m.
The sales performance will be overshadowed by the news on the dividend. Arcadia co-owner HBOS — which holds approximately 8 per cent of the company, will earn just over £100m, taking the total payout to £1.3bn. Green takes his dividend at a time that retailers are feeling the pinch. Argos and Homebase owner GUS, along with Burberry and JJB Sports have all reported disappointing results in recent weeks. Even Green’s Bhs is struggling, revealing a 4 per cent fall in turnover this year.
Arcadia’s current trading has also slipped. Sales are up 3 per cent in the year to date, which probably represents a small “negative like-for-like figure,” said Ratner. Furthermore, Green will struggle to improve on his operating margins, which rose 0.5 per cent to 18.4 per cent last year.
Still, some analysts questioned if Arcadia can afford to pay its master £1.3bn. “I have no idea how he justifies that,” said Nick Bubb at Evolution. But Green maintains the dividend, at just three times EBITA, is conservative.