April 1 (Bloomberg) -- Topshop, the U.K. clothing chain opening its first store in the U.S. this week, has a strategy that may help American shoppers forget about the recession: supermodel Kate Moss.

The four-story shop, a similar design to the Oxford Street flagship in London, opens in New York’s SoHo neighborhood tomorrow after six months of construction delays including fire and flooding. Moss’s new fashion line for the brand, her ninth collection for Topshop, goes on sale globally the same day.

Topshop, owned by billionaire Philip Green’s closely held Arcadia Group Ltd., is entering the U.S. during the worst recession in at least 25 years. Consumer spending fell in six of the last eight months as unemployment reached its highest level in more than a quarter century, forcing retailers to close shops and cut expenses.

“You’ve seen a few retailers collapse, but I think the big people will ride out the storm,” Green, 57, said in an interview while wandering the 25,000-square-foot New York store. “People haven’t stopped shopping. The young fashion market has still remained pretty resilient during these difficult times.”

Green, who was knighted by Queen Elizabeth II in 2006, declined to provide revenue or profit estimates for the store.

Last month, AnnTaylor Stores Corp. said it expects to close 163 stores by fiscal 2010, 46 more than the 117 closings announced in January 2008. Gap Inc. will close about 100 stores this year, mainly Gap locations, and open about 50 stores.

Thousands of Shoes

Topshop, which has 200 workers at its New York location, may open a second store in Manhattan and eventually expand to Miami, Los Angeles, Las Vegas and Boston, Green said.

The retailer, which says it sells 40,000 pairs of shoes a week, has more than 300 stores in the U.K. and 125 outlets in regions ranging from Scandinavia to the Middle East. Founded in 1964, Topshop was acquired by Green for $1.2 billion in 2002.

The New York store, situated downtown on Broadway, has 32 changing rooms, a DJ booth, and a shoe lounge. It sells $70 “skinny jeans” as well as jewelry and lingerie. The men’s Topman clothing line includes retro t-shirts and suits.

Topshop enters the U.S. market with competition from Stockholm-based Hennes & Mauritz AB, Inditex SA’s Zara shops, and Polo Ralph Lauren Corp.’s Club Monaco brand. Topshop already sells some clothes in the U.S. through partnerships with retailers including Barneys.

Competition

Last month, H&M reported its first quarterly profit drop in more than five years after the strengthening dollar cut into margins and the recession curbed consumer spending. Inditex, Europe’s largest clothing retailer, said fourth-quarter sales grew 9 percent and plans to add as many as 450 stores this year.

For Topshop, “the timing is not in their favor but they will benefit from being the new kid on the block,” Hana Ben- Shabat, a partner at the retail practice of consulting firm AT Kearney in New York, said in an interview. “The brand has been very successful in the U.K. and they are definitely up for playing the international fashion game.”

Comparable-store sales for the U.S. retail industry rose 0.7 percent in February, better than the 1.1 decline analysts had estimated and the first positive result since September, according to Swampscott, Massachusetts-based researcher Retail Metrics.

What Kate Moss Does

Moss’s latest spring/summer collection for Topshop ranges from $25 accessories to a $600 limited edition, floor-length sequined evening gown.

“Having Kate Moss as a designer has been a tremendous boost to the brand,” Ben-Shabat said. “There are so many young people following what Kate Moss does.”

In 2007, shoppers lined up outside of Topshop’s London Oxford Street outlet to see a preview of Moss’s first fashion collection at the store. The 35-year-old model was paid 3 million pounds ($4.3 million) to create the fashion line, the Times of London reported.

Previously, H&M had boosted earnings with fashions created by designers Karl Lagerfeld and Stella McCartney. The Swedish retailer also introduced a range with singer Madonna in 2007.

In October, Topshop owner Arcadia Group said its 2008 fiscal profit rose 39 percent as its tax bill declined. Profit rose to 164.1 million pounds in the year that ended Aug. 30 from 118.2 million pounds in prior period. Sales were unchanged at 1.8 billion pounds. Arcadia’s chains also include U.K. retailers Dorothy Perkins and Burton.

“It almost feels embarrassing or uncomfortable to say that our U.K. business is doing well,” Green said.

Green and his wife, based in Monaco, shared an estimated fortune of 4.3 billion pounds in 2007, according to the U.K.’s Sunday Times Rich List. The list, which includes inheritors of wealth and foreign-born residents of the U.K., ranks Green at No. 9, down two places from a year earlier.

The billionaire set up his first business importing jeans, using a 20,000 pound loan. He has twice made unsuccessful attempts to buy Marks & Spencer Group Plc, the U.K.’s largest clothing retailer.

To contact the reporter on this story: James Callan in New York jcallan2@bloomberg.net.

Last Updated: April 1, 2009 00:01 EDT