Selfridges’ Thai owners take on 70 billion baht debt

Central Group, SelfridgesThai owners along with Austrian enterprise Signa Holdings, have taken on another £1.7 billion (US$ 2 billion, 70 billion baht) of debt in a strategy to increase investment returns.
The London branch of Bangkok Bank provided the loan, secured against the lease on the retailer’s London flagship store.

Selfridges Thai Owners
A massive loan by Swiss lender EFG is secured against Selfridges’ Exchange Square premises in Manchester.

Selfridges said the loan would “release capital” for the acquisition, but that this did not amount to the payment of a dividend to its new owners. Another mammoth loan, the size of which has been redacted in corporate filings, has been provided by Swiss lender EFG and secured against Selfridges’ Exchange Square location in Manchester.

Selfridges comprises 18 stores under four names – Selfridges (England), Brown Thomas, Arnotts (Ireland) and De Bijenkorf (the Netherlands). Last year the Selfridges group was integrated with Central and Signa’s combined portfolio of 22 department stores.

Last September the group announced a two-part strategy including the development and expansion of well-known stores in tourist cities in partnership with luxury brands. Central Group unveiled its luxury strategy as an international luxury department store.

Selfridges’ Thai owners to redevelop Oxford Street store

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In 2003, Selfridges was acquired by Canada’s Galen Weston for £598 million.

At Selfridges Oxford Street, a redevelopment of the under-used hotel, car park and mews is under consideration. Another area of the group’s luxury strategy is to become an e-commerce platform and partner of choice for luxury brands with global reach.

In the 1940s Selfridges became part of the John Lewis Partnership, and in 1951, the Oxford Street store was acquired. Lewis’s and Selfridges were taken over in 1965 by the Sears Group and expanded to include branches in Manchester and Birmingham. The chain was acquired in 2003 by Canada’s Galen Weston for £598 million. Reports suggest that the Westons placed a £4 billion (US$4.8 billion, 170 billion baht) price tag on the group when it was put up for sale and divided Selfridges into separate trading and property companies.

Selfridges’ Thai owners take on significantly more debt

Selfridges THAI OWNERS
By increasing debt burden, Selfridges Thai owners face higher costs and squeezed profit margins.

Debt is reportedly significantly higher than the £550m loan previously provided by HSBC to the Westons, which was also secured against the Oxford Street premises. The increasing debt burden often results in high rent being charged, with the business now potentially facing higher costs and squeezed profit margins.

Injecting more debt into a business also reduces the equity contributed by the owners. As a result, the returns of the owners can be significantly more if the overall value increases.

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Jon Whitman

Jon Whitman is a seasoned journalist and author who has been living and working in Asia for more than two decades. Born and raised in Glasgow, Scotland, Jon has been at the forefront of some of the most important stories coming out of China in the past decade. After a long and successful career in East sia, Jon is now semi-retired and living in the Outer Hebrides. He continues to write and is an avid traveller and photographer, documenting his experiences across the world.