Top of the shops as Arcadia defies the high street blues

Arcadia Group's operating profits increased 10.4 per cent to 279.6m in the year to August 28, on sales up 40 per cent to 2.8bn.

However, UK like-for-like sales growth at the group – which also includes Bhs, Miss Selfridge, Burton, Dorothy Perkins, Wallis and Evans – has declined in recent weeks.

Sales through stores that have been open for more than a year were up by 1 per cent in the past 11 weeks, whereas they had grown by 1.3 per cent over the group's financial year.

In a statement, Sir Philip said he was cautious about the year ahead because of increases in VAT, business rates, raw materials and wages.

Fashion retailers including Primark, Next and New Look have all recently warned that the cost of clothes will rise in the coming months after a near doubling in the price of cotton.

Sir Philip said his two leading brands, Topshop and Topman, had reported record turnover and profits in the year.

But Bhs's performance trailed behind the rest of the group, with like-for-like sales growth of 0.9 per cent in the year, compared to 1.5 per cent in the rest of the group. This was despite the company having created 215 concession departments within Bhs, mainly for its Wallis and Dorothy Perkins brands.

The group runs 2,542 company-owned stores and 579 franchises. It trades in 37 countries.