British retail tycoon Philip Green's Topshop-to-Dorothy Perkins Arcadia fashion business on Tuesday reported a 42% slump in full-year profit, blaming intense UK competition.

Underlying operating profit at Green's Taveta Investments Limited, the holding company that owns Arcadia, fell to £124.1 million in the year to August 26 2017, from £215.2 million in the previous year, on sales down 5.6% to £1.91 billion.

Arcadia runs Topshop, Topman, Wallis, Miss Selfridge, Dorothy Perkins, Evans, Burton and Outfit. The year in question was a particularly challenging one for the firm. It saw its Australian Topshop business going under and requiring a rescue deal, while the brand also later pulled out of Spain.

But the challenges in the company’s core UK market were its biggest problem, although it’s hard to see from these results just which parts of the business are struggling the most. Taveta/Arcadia is privately held and so is under no obligation to give us plenty of detail.

However, it's known that the company is closing stores and that the star Topshop brand is part of that programme so isn't immune to the woes on the British high street.

"The retail environment remains highly competitive and challenging," said Taveta chief executive Ian Grabiner.

But he added: “Whilst we have found headline sales and profits disappointing, we remain a strongly cash generative business and had a positive net cash balance at the year end of £157.2 million.”

And a cash balance is alway important with many theoretically viable retail businesses having gone under due to weak cash flow. 

The company still has money to invest and continued to spend for future growth during the last year, with its capex up to £214.9 million, from £97.8 million a year earlier.

Grabiner said the firm is invest this year too and will spend £81.5 million. It’s working on a new state-of-the-art 1 million sq ft distribution centre in Daventry that will open next year.

Additional reporting by Sandra Halliday