Central Group Vows to Back Selfridges, KaDeWe, Other Luxury Properties Amid Signa Scandal

Samantha Conti
·5 min read

Updated Nov. 6, 11:55 a.m.

LONDON — Thailand’s Central Group is standing by its luxury retail properties, which include Selfridges and KaDeWe in Germany, as joint venture partner Signa sinks deeper into crisis.

More from WWD

Central Group said it is a “proven long-term owner and investor in all of its businesses,” and “regardless of the position of our JV partner,” it is committed to supporting all of its European luxury stores. “We will ensure that they have all the backing they require to continue to operate as normal.”

Central issued a statement following news reports in the U.K. and Germany that Signa, the multibillion-euro Austrian property developer founded by René Benko, is on the verge of collapse due to the recent spike in interest rates, plummeting real estate values, and poor management.

Benko has been removed as company chairman, while shareholders have hired the German restructuring experts Arndt Geiwitz to salvage the company, according to reports.

Signa has not returned a request for comment.

Two years ago Signa and Central Group joined to acquire Selfridges for a reported 4 billion pounds. They each took a 50-50 stake in the retailer, which they later split into two businesses, a property one and a retail one. The latter pays rent to the former.

The deal spanned the Selfridges Group’s portfolio of 18 department stores, including Selfridges in London, Manchester and Birmingham, England; de Bijenkorf in the Netherlands; Brown Thomas and Arnotts in Ireland, and their associated e-commerce platforms and the properties in London, Manchester and five locations in Ireland.

It wasn’t the first time that the two multinational companies had joined forces. They also jointly own Globus in Switzerland in addition to KaDeWe.

On Monday, Selfridges and KaDeWe issued similar statements, and said their businesses would not be affected by Signa’s woes.

A Selfridges spokesman told WWD that Signa’s issues “do not change anything for Selfridges, which trades independently of any support from its shareholders. We are delighted to have the ongoing and unwavering support of Central Group.

“We are very focused and excited by the Christmas period and welcoming our customers into our stores for an exceptional experience,” the spokesman said.

Similarly, KaDeWe Group said it is not financially dependent on Signa. “Our business will continue as usual, and is unaffected. We have the full support of our main shareholder, the Central Group from Thailand.”

At the time of the Selfridges purchase in 2021, Tos Chirathivat, executive chairman and chief executive officer of Central Group, said:

“Central and Signa will focus on delivering exceptional and inclusive store and digital experiences for both local residents and overseas visitors alike to ensure we can give all the stores in Selfridges Group a bright future for the next 100 years.”

Central is controlled by the Chirathivat family, and operates retail businesses in Thailand and Vietnam, as well as in Europe.

In the past, the company has made no secret of its intentions to expand through acquisitions in Europe and Asia, and said it has little interest in the U.S. market.

“It’s a very big market, very advanced. It’s very sophisticated, whereas in Europe, we feel that we can buy these stores and improve them,” said Chirathivat in an interview with WWD in 2017.

In an interview with WWD nine months after purchasing Selfridges from the Weston family, both partners were bullish about the future.

Asked why the partners purchased Selfridges, Ernst Dieter Berninghaus, co-chairman of Selfridges Group and chairman of the executive board of Signa, said: “For us, this was a once-in-a-lifetime opportunity.”

He added that the British group was different from past acquisitions in that it did not need to be restructured. “We don’t have to clean up or repair the past, and that’s so attractive and exciting for us because it means that from Day One, we can work toward the future,” he said.

Signa Group describes itself as an international investment and industrial holding company that’s active in the real estate, retail and media business sectors. It was founded in 1999, and bills itself as one of Europe’s most important real estate investors.

Its holdings range from the Hotel Bauer Palazzo in Venice to KaDeWe; the German retail chain Galeria Karstadt Kaufhof; Eataly, and the Chrysler Building in New York. It also owns Signa Sports United, which operates around 80 web shops for sports fans in 17 countries.

With a restructuring imminent, it remains unclear whether Signa will sell its 50 percent stake in Selfridges and, if so, whether Central Group will purchase it.

“With Signa potentially out of the way, Central could really put their stamp on the businesses,” said one industry observer who asked to remain anonymous.

“But the questions remain. Will Signa sell their stake in Selfridges at all? And if so, will they sell it to Central? I can imagine that some of the interested parties from the time of the sale may come forward, although the luxury business isn’t what it was in 2021,” the person said.

These are certainly tougher times to be operating a luxury business, even a robust one such as Selfridges.

In the fiscal year ended Jan. 28, revenue at Selfridges’ four U.K. stores jumped 29 percent to 843.7 million pounds while pretax losses narrowed.

According to the most recent filings on Companies House, the official registry of U.K. businesses, shoppers flooded back into Selfridges’ stores, particularly the flagship on Oxford Street in London and the unit at Royal Exchange, Manchester, once the omicron strain of COVID-19 receded and lockdown restrictions eased.

The uptick in sales helped contribute to the reduction in pre-tax losses to 37.9 million pounds from 121.5 million pounds in the previous period. Much of the company’s cost base is due to property, and Selfridges said that a rise in finance costs was offset by a decline in rental expenses during the period.

Selfridges is also carrying substantial debt following Signa’s and Central’s purchase of the properties from the Weston family. As reported, the new owners loaded the business with more than 1.7 billion pounds in debt, the result of rising interest rates.

– With contributions from Cathrin Schaer, Berlin

Best of WWD

Click here to read the full article.