Suitors circling Selfridges are testing the future of post-pandemic retail
Spokesmen for Selfridges and Credit Suisse both declined to comment on the potential sale.
Founded in 1908 by Harry Gordon Selfridge, the retailer came under the control of Canadian businessman Galen Weston in 2003 for nearly £600 million. The group has since expanded to other department store chains, including Arnotts and Brown Thomas in Ireland, Holt Renfrew in Canada and Bijenkorf in the Netherlands. Holdings outside the UK and Ireland would not be included in the proposed sale, the people said.
Assessing the value of the property will be a key part of any potential sale. A chance to own the 540,000 square foot (50,168 square meters) Fine Arts store on Oxford Street is an attractive proposition. But it has also become a place more and more surrounded by vacant neighbors. Rival department stores on the UK’s busiest shopping street, including Debenhams and House of Fraser, have closed, while John Lewis plans to convert part of his store into offices.
Around 9.4% of retail space in London’s West End is now vacant, causing rents in central London’s best stores to fall by around 14% in the year through March, according to a published study by real estate agent Savills. Oxford Street rents fell nearly 18% over the period, according to brokerage data. It hit investor demand for stores in London’s tourist hub, with transactions in the first quarter down almost 46% from a year earlier.
While Selfridges has performed well operationally for many years and paid tens of millions of pounds in dividends to the Westons, it is not immune to the challenges of retail. The latest accounts filed for the parent company reveal how COVID-19 has significantly affected near-term profits, which could put pressure on their bank liabilities and require additional family support.
“Anyone who buys it will likely be after the brand, because Selfridges really only has a few stores,” said Tony Shiret, retail analyst at Panmure Gordon. “They would probably like to try and monetize the name by maybe opening a few flagships around the world and boosting digital commerce.”
Recently the Westons have invested £$ 300 million to modernize many parts of the Oxford Street store. As a family, they have been a dominant force in the retail business for four generations, with extensive interests which are divided into two branches in Canada and the UK.
The Canadian wing controls Selfridges, while the British side controls Associated British Foods, which owns Primark and Fortnum & Mason, the queen’s grocer. Galen Weston, the grandson of dynasty founder George Weston and family patriarch, died earlier this year. Her children Galen and Alannah, who is president of the Selfridges group, remain with the company. George Weston, a cousin, runs Associated British Foods.
Although the pandemic has hit Selfridges hard, there will always be significant interest from buyers, according to Jonathan De Mello, partner at consulting firm CWM. Already, speculation is mounting that sovereign wealth funds, commercial buyers and private equity will explore the offers, he said.
“This is a one-time deal in a generation, perhaps giving a major Chinese player the perfect opportunity to capture a huge luxury footprint all at once,” said Anthony Selwyn, Head of Retail in London. and international at Savills.