Downturn at London flagship store forces early sales at Selfridges

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The Independent Online

Selfridges, the department store group that has agreed to be bought by the Canadian billionaire Galen Weston, revealed that sales slipped at its flagship London store during the war in Iraq, forcing it to hold an early summer sale.

The company, which faces the prospect of a counter bid from a consortium including the Iranian investor Robert Tchenguiz, said its gross margin had slipped by 1 percentage point as a result of bringing forward some clearance activity at its Oxford Street store.

Alun Cathcart, Selfridges' chairman, said the group had had "no new contact" from any other bidders since Monday, when it clinched a £600m deal with Mr Weston. The group's shares rose 2p to 395.5p, above the 387p-a-share bid price, indicating the chance of a higher offer. Aletheia Partners, the consortium including Mr Tchenguiz and Bernie Ecclestone, the Formula One entrepreneur, were understood to be working hard on their offer for Selfridges – thought to be in cash with a part-listed equity alternative. The team is also talking to other potential investors.

Asked whether he was expecting another offer, Mr Cathcart said: "I've no idea. It's up to others. I've heard nothing at all about any new contact."

In a trading update to accompany its annual shareholders meeting, Selfridges said sales at its London store were 1 per cent below last year in the first 14 weeks of its financial year. They rose by 4 per cent at its Trafford Centre site in Manchester and total group sales were 8 per cent ahead.

Nick Bubb, a retail analyst at Evolution Beeson Gregory, said the dip in profit margins could put Aletheia off. "Trading's a little bit disappointing. It makes you wonder why so many people have been looking to buy a West End trophy," Mr Bubb added. Tom Hunter, the Scottish entrepreneur, and the Reuben brothers, the Asian metals traders, and Peter Williams, the chief executive, were among the disappointed bidders.

Selfridges said full-year results would depend on trading in the crucial second half, adding: "But with the resilient trading in all of our stores we remain confident about the prospects for the business."

Richard Ratner, at Seymour Pierce, said that while Aletheia could launch a bid, he expected Mr Weston to wind up with the group.

Mr Weston holds a 10.1 per cent stake in Selfridges, which would make it harder for any eventual bid from Aletheia to succeed, analysts added.

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