Green buys Allders stores in fresh challenge to M&S
Tuesday 15 February 2005
Philip Green's Bhs group is to go head-to-head with Marks & Spencer in the competitive home furnishings market after his purchase yesterday of 10 Allders stores.
The retail entrepreneur is buying the stores as part of a package of 24 stores that Kroll, the administrators to the collapsed department store group, sold yesterday to Bhs, Debenhams and Primark, the discount retailer owned by Associated British Foods.
Mr Green, who attempted to buy M&S last summer for up to £9.1bn, is taking on most of the Allders stores that are dedicated to home furnishings. All 10 are expected to trade as Bhs stores by the summer.
Mr Green said: "It's something we've been looking at for a while. We've got a nice offer. We thought we'd give it a go if we could get some scale"
In opening standalone home stores, Mr Green is attempting to succeed where M&S failed dramatically. Last month, M&S closed its Lifestore in Gateshead less than one year after opening it.
Asked whether he expected his attempt to be more fruitful than M&S's, Mr Green said: "We're not planning to open it for six months and then close it down, put it that way." Just one of Bhs's 174 stores is devoted to homewares.
Debenhams, which is owned by the private equity firms CVC and Texas Pacific, is buying eight stores, while Primark is acquiring six. All are expected to be in the hands of their new owners by the end of March.
Despite yesterday's deals, 21 stores remain unsold. Kroll said it was still reviewing "all options" for the sites, which include a number for which it has been unable to attract any interest. Alastair Beveridge, Kroll's joint administrator, said: "We will now focus on the options for the remaining stores and the head office."
Almost 800 of Allders' employees have lost their jobs since the department store group collapsed last month. Those affected include about 250 at the company's head office in Croydon.
Kroll declined to disclose the price paid for the 24-strong store package but Associated British Foods said it would invest a total of £110m for its six sites. The total cost includes refitting the stores to trade as Primark by the autumn. Buying the sites enables ABF to complete its space target for this year for Primark. The Twinings tea-to-British Sugar conglomerate had resigned itself to adding space to old stores to hit its goal of adding 230,000 sq ft in 2005; yesterday's deal added an extra 300,000 sq ft. Only one of the six sites, in Bromley, is freehold.
Rob Templeman, Debenhams' chief executive, said taking over the Allders stores was part of its plans to roll out more than 200 Debenhams stores. Separately, the group said it had raised £495m from a sale-and-leaseback deal with British Land involving 23 of its stores.
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