Possible Selfridges sale throws futures of BT and Arnotts up in air

Cantillon: Profile of buyer crucial to outcome for Dublin city’s two prime retail assets

Speculation in the UK that retail group Selfridges has been put up for sale for more than £4 billion has raised the prospect that Dublin's two largest department stores, Brown Thomas and Arnotts, which are both owned by the UK group, could be offloaded as part of any deal.

If they are sold, the profile of the buyer – private equity, trade or a trophy buyer – will be crucial for their future.

Respected UK property website React News reported that an unsolicited bid was received for Selfridges, which is owned by the family of the late Canadian billionaire Galen Weston, who died in April. On foot of this approach, it is reported that Credit Suisse has been appointed to run a sale process.

Weston control

Brown Thomas has been stable under the Weston family’s control since the 1980s, albeit the pandemic will continue to affect it for a long time through the absence of high-spending foreign tourists who are an important part of its mix.

Arnotts has faced far greater upheaval in recent years and it could do with as little extra drama as possible over the next few years. If it is sold, it would be its third change of control in a little over a decade, after it was went from the Nesbitt family to the banks during the crash in 2010, and then came under the wing of Selfridges in 2015.

Retail competition

The last transaction was scrutinised by competition regulators, who concluded that it would not damage retail competition in the city. But the union of Brown Thomas and Arnotts in the context of a potential Selfridges group sale has now thrown the future of Dublin city’s two prime retail assets up in the air at the same time.

Selfridges, a London institution, is likely to attract interest from trophy buyers from the Middle East who may be less enamoured by the prospect of owning two Irish stores that come with the deal. Could they be flipped on afterwards and to whom?

A private equity buyer, who might see value in breaking up the Selfridges empire, could also cause uncertainty for BT and Arnotts. A trade buyer would be the most stable option for the two Dublin stores. But this is also the most unlikely, given the state of the balance sheets across the rest of the sector.