Page 30 - July 2021

MARK FAITHFULL

Following

the Money

Mark Faithfull crunches the numbers as he looks at
analysis and expansion that reflects changing markets

MYSTERY BUYER TARGETS SELFRIDGES FAST FASHION RETAILER SHEIN DENIES IPO
AND EUROPEAN STORES RUMOURS
A mystery buyer has offered to purchase the Selfridges Chinese fast fashion retailer Shein is understood to have begun preparations
department stores for around $5.6bn. The upscale chain has for a possible $47bn IPO and is expected to submit a prospectus for listing
received an unsolicited approach for the flagship London in the near future. While Shein has denied the rumours emanating across
store and a number of other department stores currently the Chinese investment community grapevine, the sizzling hot IPO market
owned by the wealthy Weston family. could yet see Shein join Poshmark, Dr Martens, and ThredUp, which have all
They have appointed Credit Suisse as adviser to consider brought their fashion offers to the public markets this year.
what the next step forward for the company could be, with Shein’s revenues for 2020 are expected to be close to $10bn and the
proceedings currently understood to be at an early stage fashion retailer’s ongoing rise in popularity saw the fast fashion e-commerce
and may not lead to a transaction. app take the crown from Amazon last month for the most downloaded
Selfridges owns more than 600,000sq ft of selling space shopping app on iOS and Android in the US, according to data from app
at its flagship Oxford Street store in London and the tracking firms App Annie and SensorTower. It has been at number two
Weston’s holdings now comprise a stable of upmarket since February.
stores in the UK, Ireland and the Netherlands, plus two Operating out of the limelight and hardly known outside its Gen Z fans,
further Selfridges stores in Manchester and another in Shein was thought to have been considering an offer for Topshop when it
Birmingham. The Weston’s also own Canadian department went up for sale earlier this year, sparking rumours that it may be considering
store group Holt Renfrew. taking physical stores to complement its online offer.
While a deal to sell the iconic London landmark might be
tempting at a time when physical retail has been severely MORRISONS VALUE SURGES AS INVESTORS BET ON
hit by the global pandemic, it might also see the group’s PRIVATE EQUITY
assets under-valued at a point where there has been little Shares in supermarket chain Morrisons surged by almost a third after the
opportunity for recovery. London, like other major cities supermarket giant rebuffed a $7.6bn takeover from US private equity firm
reliant on overseas income from tourists and international Clayton, Dubilier & Rice. The huge spike in its valuation was prompted by
travellers, is likely to lag behind other retail locations in its breaking news over the weekend of 19/20 June that Morrisons had become a
recovery, given the slow return of travel. Oxford Street takeover target for CD&R, potentially sparking a bidding war for the grocer.
especially has been devastated by retail losses and a lack of The news prompted shares to rise across the grocery sector, as investors
estate management along the street. bet that other supermarket groups could become targets for private equity
Anne Pitcher, the boss of Selfridges, admitted earlier this investors or that a bidding war could erupt, with online giant Amazon –
year: “We will change the way we shop from this point on which has an online delivery deal with Morrisons - a possible bidder for
forever. We will shop more digitally, there will be fewer its partner.
stores, I’m afraid. People in the short term will not want to American private equity firms Lone Star and Apollo Global Management
visit public spaces as often or attend large events. It will be have also been mentioned as possible suitors for Morrisons, which has been
the most difficult year ahead of us that we’ve ever known. battling with a falling market share, now down at 10 per cent, from 10.6 per
This is about reinventing retail, nothing less.” cent five years ago.
In 2019, London’s iconic Liberty was sold to a consortium CD&R has previously made investments in the discount UK store chain
of private equity investors and Knightsbridge-based rival B&M and the New York-headquartered private equity firm has until 17 July
Harrods was acquired by the Qatar Investment Authority to make a firm offer. Sir Terry Leahy, a former Tesco chief executive, is a
in 2010. senior adviser at CD&R and, like its market-leading rival Tesco, Morrisons’
shares have been trading below their pre-pandemic levels as higher costs
due to operating throughout the Covid crisis have cancelled out booming
sales at essential stores across the UK.
Morrisons currently employs 121,000 people and owns the freehold for
85 per cent of its 497 stores. One-quarter of what it sells comes from its
own supply chain of fresh food manufacturers, bakeries and farms.

30 RETAIL & LEISURE INTERNATIONAL JULy 2021
50 RETAIL & LEISURE INTERNATIONAL NOVEMBER 2018