Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

Philip Green's Arcadia Group Ltd. is starting to look a lot like BHS.

The department store chain went into administration in April 2016, a year after Green sold it for one pound to Retail Acquisitions Ltd., a group of investors led by Dominic Chappell.

Under Green's ownership, BHS, or British Home Stores, suffered years of decline. That's the path Arcadia's other brands -- including its jewel in the crown, Topshop -- appear to be on unless Green takes some swift action.

Sales, and earnings, are faltering. The family-controlled holding company for Arcadia, Taveta Investments Ltd., reported a 16.5 percent drop in underlying operating profit to 211.2 million pounds  ($272.6 million) in the year ended Aug. 27, accounts filed at the U.K.'s Companies House show. After 129.2 million pounds in one-off losses -- most of that property write downs -- pre-tax profit tumbled to 36.8 million pounds, from 172.2 million pounds.

Of course, BHS was already deep in the red before Green sold it. Arcadia is still making money. It's also generating cash, although cash from operating activities did fall from 230.3 million pounds to 168.3 million pounds over the period.

But like BHS, Arcadia's stable of brands are fighting to stay relevant.

Wallis, Dorothy Perkins, Miss Selfridge, Evans, and Burton are all battling the twin threats of consumers spending less on clothing, and shopping online. Even Topshop is looking past its sell-by date.

Millennials don't have the emotional attachment their mothers had to Topshop. Ten years ago, hundreds of shoppers converged on its London flagship store to snap up Kate Moss's debut collection. These days, the likes of YouTube star Zoella would pull in the crowds.

Young, fashion-conscious customers now frequent Asos Plc, or Plc, which sell the latest looks over the internet, often undercutting Topshop on price.

There's also Arcadia's pension deficit, which more than doubled to 426.8 million pounds over the past year.

Off Trend
Arcadia's pension deficit more than doubled in 2016
Source: Company filings

There are some signs Green has learned from the BHS debacle. Part of the department store's problem was that it suffered from years of under-investment.

Green has called in McKinsey & Co. to help reinvigorate the retail conglomerate, according to the Sunday Times. Topshop has been quick to embrace social media and other technologies to engage with consumers. But it needs to do more. Asos and Boohoo aren't standing still.

Green has also agreed to double Arcadia's pension contribution to 50 million pounds a year for the next three years, with the aim of eliminating the deficit within a decade. That's as good as any U.K. company and better than most, according to pension industry consultant John Ralfe. It's also far superior to BHS, which famously agreed to make good on its pension shortfall over 23 years.

But if McKinsey recommends a costly overhaul, Green must open his own wallet.

Nice for Some
Arcadia accounts for the bulk of Philip Green's net worth
Source: Bloomberg Billionaires

Earlier this year, he agreed to pay up to 363 million pounds of his personal fortune to compensate BHS pension holders. Topshop had an enterprise value of 2 billion pounds back in 2012, but it's probably worth less now. As my colleagues David Hellier and Sam Chambers of Bloomberg News noted, Leonard Green & Partners LP,  a Los Angeles-based private-equity firm, has written down the value of its 25 percent stake in Topshop. According to data compiled by Bloomberg, Green's net worth stands at $3.1 billion.

Big Spender
Topshop's rival Asos has been ramping up investment
Source: Company filings, Bloomberg Intelligence

Arcadia poured just under 100 million pounds into the business in 2016, more than Asos's 87 million pounds. But Asos is almost doubling its commitment this year. Green should do the same.

Topshop, as the group's most valuable asset, should get much of the cash. Green's played Scrooge in the past -- he could have contributed to the BHS pension schemes when he sold the chain, or retained the liabilities.

Making the same mistakes this time round with Topshop could prove fatal.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andrea Felsted in London at

To contact the editor responsible for this story:
Katrina Nicholas at