SIR Philip Green's Topshop and Miss Selfridge empire has reported lower profits after continued tough trading at department store chain BHS.

Arcadia Group, which holds a UK portfolio of more than 2,300 shops under brands including Burton and Dorothy Perkins, said underlying profits were 3 per cent lower to £148.1m in the year to August 30.

Total sales were up slightly to £2.7bn, with the UK figure on a like-for-like basis broadly flat on a year ago, assisted by strong performances from Dorothy Perkins and Wallis.

Sir Philip said: "The retail industry continues to be fast changing, as the number of channels through which customers choose to purchase and engage with us continually evolves, thus increasing the complexity of our operations, and our need for efficiency and speed to market."

In the first 10 weeks of the new financial year, underlying sales were down 1.2 per cent against last year as recent unseasonably mild and wet weather has had an impact across the retail sector.

At BHS, which Sir Philip bought for £200m in 1999, trading has been challenging in a sector where conditions have been very tough.

Sir Philip did not pay a dividend from the business for the ninth year running, with the last payout in 2005 triggering a £1.2 billion windfall.

The company said it continues to review its property portfolio in the UK, driven by the number of leases due to expire.

Over the last year the company has closed a net figure of 64 stores and 213,000 square feet of space, taking its current portfolio to 2,311.

It continues with the trial of three BHS food stores opened in the past year, which have traded favourably in the early stages of their development.

In the United States, the company opened three new wholly owned stores, bringing the total to seven, including its 40,000 sq foot Topshop Topman flagship store on New York's 5th Avenue.