Kuwait’s Alshaya eyes cut-price assets on UK high street

MH Alshaya Co, the Kuwait-based retail conglomerate, is eyeing new opportunities on the UK high street in the wake of the company’s deal to buy out struggling lingerie chain La Senza UK.

The UK has seen a string of retailers fall into administration as dwindling sales and rising costs take a toll on profits. But chairman Mohammed Alshaya said the recession could offer rich pickings to companies prepared to make a long-term investment in high street brands.

“I am mindful of the challenges the UK is facing but personally I think these are medium-term challenges, maybe four years at the maximum,” he told Arabian Business in an exclusive interview to be published Jan 22.

“Just because we are not a public company doesn’t mean we accept lower returns.  The key difference, and it is a very key difference, is that we always have to make the right investments. That means we have to invest for the medium to long-term, and we have to accept a growth rate that is good for us,” he said.

Alshaya last week confirmed it had agreed to buy 60 La Senza stores in the UK, saving an estimated 1,100 jobs. The lingerie chain closed 84 stores and 18 concessions after announcing in December that it was seeking administration, resulting in the loss of around 1,300 jobs.

Alshaya, which operates more than 55 brands in 19 countries, plans to invest £100m ($155m) in the UK retail market in the next two years.

“We’re looking at some ideas for the medium and long-term,” the chairman said.

Analysts said companies in the oil-rich GCC could increasingly look to snap up fire-sale assets in the UK and US to bolster trade in the still-thriving regional retail markets.

US-based bookstore Borders and UK clothing retailer Jane Norman both filed for bankruptcy last year but have continued to do good business in the GCC under their franchise deals.

The chairman of KPMG, which brokered the deal between Alshaya and La Senza, said the company has seen rising interest from local firms keen to capitalise on the downturn in developed economies.

 “We’re seeing huge appetite. I’ve had a number of Gulf investors come through my office looking at putting together funds to soak up real estate assets in certain countries as they see that as being one of those opportunities to bottom feed,” said Michael Andrew.

“There is no doubt that [we’ll see more interest]. This is one of those unique buying opportunities that comes up every 30 years in the cycle.

“Those that have got the capital and the capacity to do that are going to be well-placed. They can be prepared to take a medium to long-term view.”

*Additional reporting by Claire Ferris-Lay