Selfridges’ New Owners Increase Debt to Over £1.7 Billion

The recent acquisition of Selfridges by Thailand’s Central Group and Austria’s Signa Group has led to a substantial increase in the renowned department store’s debt. Reports indicate that the new owners have added over £1.7 billion to Selfridges’ balance sheet through a series of loans obtained from various trading properties during the ownership transfer last year.

One of the main loans, amounting to £1.7 billion, was provided by the London branch of Bangkok Bank, and it is secured against the freehold of Selfridges’ flagship store on Oxford Street in London. This allowed the consortium to release capital for the acquisition, although it was not utilized as a dividend payment to the new owners. Additionally, a significant loan was also secured against the Exchange Square branch of Selfridges in Manchester, although the exact amount remains undisclosed.

It is worth mentioning that the previous owners of Selfridges, the Weston family, had previously taken out loans against the Oxford Street property; however, their loans only amounted to £550 million. Utilizing debt as a means to purchase a business is a common strategy, comparable to obtaining a mortgage to purchase a house. The Issa brothers, who recently acquired Asda, also adopted a similar approach.

Nonetheless, the owners of Selfridges refute comparisons to other cases, emphasizing that their level of debt is considerably lower. They argue that the luxury focus of their business insulates them from many of the challenges faced by the broader UK retail sector. According to a spokesperson for Selfridges, “Selfridges enjoyed its best Christmas ever in 2022, and we remain highly confident about the future. Our unique operating environment, where customers come to Selfridges for the experience and pleasure our stores offer, including our digital platforms, sets us apart.”

It is evident that the new owners of Selfridges exhibit confidence in their investment despite the increased debt burden. With their substantial financial resources and belief in the resilience of the luxury retail sector, they are well-positioned to navigate the challenges within the industry and capitalize on the distinctive experience they provide to customers.