Mystery shopper targets world-famous Selfridges for $ 5.6 billion
A mystery shopper has offered to buy Selfridges high-end department stores for around $ 5.6 billion. The upscale chain has received an unsolicited approach for the London flagship store and a number of other department stores currently owned by the wealthy Weston family.
The family appointed Credit Suisse as an advisor to consider what could be the next step for the business, with proceedings currently considered to be at an early stage and may not lead to a transaction.
Selfridges has more than 600,000 square feet of retail space at its flagship store on Oxford Street in London and Weston’s holdings now include a stable of high-end stores in the UK, Ireland and the Netherlands, as well as two other Selfridges stores in the UK city of Manchester and another in Birmingham. The Weston also owns the Canadian department store group Holt Renfrew.
While a deal to sell the iconic London landmark may be tempting at a time when physical retail has been hit hard by the global pandemic, it may also see the group’s assets dumped to a point where there are had little chance of recovery.
London, like other major cities reliant on foreign income from tourists and international travelers, is expected to lag behind other retail stores in its recovery, given the slow return of travel. Oxford Street, in particular, has been devastated by retail business closures and a lack of property management along the street.
According to real estate agent Savills, around 9.4% of retail space in London’s West End is now vacant, causing rents in major central London stores to fall by around 14% over the year through March . Oxford Street rents fell almost 18% over the period.
Assessing the value of the property will be a key part of any potential sale. A chance to own the Fine Arts store on Oxford Street is an extremely attractive proposition. But it has also become a place more and more surrounded by neighbors with closed shutters.
Selfridges Deal: Stick or Sell?
Selfridges is named after its founder Harry Gordon Selfridge, a colorful American entrepreneur who invested around $ 560,000 to build a store on what was then the old-fashioned end of Oxford Street, opening the London flagship store in 1908. In 2003, the Weston family deprived him in a deal worth $ 843 million.
While mass-market department store chains have gone through a scorching spell in the United States and Europe, Selfridges has been able to weather the downturn of recent years thanks to its mix of avant-garde fashion and renowned estates such as Super Brands, an indoor skate park, a shoe department that is among the largest in the world, and its recent announcement that Selfridges will host weddings.
However, in the UK, Debenhams recently went bankrupt and John Lewis closed several stores. Both have flagships on Oxford Street, and while John Lewis has announced plans to convert upper-level retail space into offices, Debenhams and House of Fraser have closed their stores.
Anne Pitcher, the boss of Selfridges, admitted earlier this year: “We’re going to change the way we shop from now on forever. We will buy more digitally, there will be fewer stores, I’m afraid. In the short term, people won’t want to visit public spaces as often or attend large events. It will be the most difficult year ahead of us that we have ever seen. It’s about reinventing retail, nothing less.
Trophy assets: Selfridges, Liberty and Harrods
Despite the closure of its neighboring department stores and problems with Oxford Street, high-end trophies such as Selfridges can still sell for high prices and attract overseas buyers. In 2019, London’s iconic Liberty was sold to a consortium of private investors for more than $ 423 million, more than double its annual revenue. And its Knightsbridge-based rival, Harrods, was acquired by the Qatar Investment Authority for $ 2.1 billion in 2010.
The approach also comes at a time of change after the family patriarch, W Galen Weston, passed away earlier this year. Paul Kelly, who had headed the Selfridges group since the Westons acquisition, moved to another role within the holding company in 2019. Wittington Investments, the family-owned holding group that owns Selfridges, is separate from the UK entity in the name almost identical who owns Associated British Foods (which owns Primark) and is run by Weston’s son, also called Galen, while his sister Alannah is president of the Selfridges group. Both are cousins of ABF CEO George Weston.
Since taking control of Selfridges 18 years ago, the Weston family has invested heavily in the store and has since expanded to other department store chains including Arnotts and Brown Thomas in Ireland, Holt Renfrew in Canada and Bijenkorf in the Netherlands. A sale to a sovereign wealth fund or tycoon seems more likely than a transaction involving private equity.