Philip Green has transformed Arcadia since he took it over

Privately-owned Arcadia, which includes TopShop, Burton and Miss Selfridge, saw sales excluding new stores slip by nearly 2% in the year to 2 September.

The tough retail scene has already hit his BHS chain with a 60% dip in profit.

Last year, Arcadia paid a massive �1.3bn dividend, most of which went to Sir Philip, who owns 92% of the group.

Kate in, Jane out

Despite pre-tax profits falling from �253m to �202m and profit margins shrinking 1.8% to 16.7%, Sir Philip said he was pleased with Arcadia's results.

"This represents a strong performance when set against a competitive retail market, significant investment in new space by our competitors, and underlying cost inflation for all retailers."

He has previously denied reports that Arcadia is being squeezed between competition from High Street rivals like Next and the resurgent Marks and Spencer and the rise of discount retailer Primark.

He said the group had opened 46 new outlets over the last year and would spend �30m on new stores and refurbishments in the twelve months ahead.

Kate Moss has a reputation for setting new fashion trends

Arcadia's highly profitable TopShop women's fashion chain has had mixed fortunes recently.

In September, Sir Philip pulled off a coup by announcing that he had signed model and fashion icon Kate Moss to design a range of clothes and accessories for the store.

A few weeks later, TopShop's brand director Jane Shepherdson announced her departure, although she denied it had anything to do with any rivalry with the supermodel.