Signa, a multi-billion euros 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 bad management.
According to multiple press reports in the U.K. and Germany, Benko has been removed as company chairman, while shareholders have hired the German restructuring experts Arndt Geiwtiz to salvage the company.
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.
Separately, Central Group said it is a “proven long-term owner and investor in all of its business. Regardless of the position of our JV partner, Central Group is committed to supporting all of its European luxury stores, including Selfridges Group, and will ensure that they have all the backing they require to continue to operate as normal.”
WWD has contacted Signa 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 multi-national companies had joined forces. They jointly own Illum in Denmark, Globus in Switzerland, and Germany’s KaDeWe Group.
WWD has contacted KaDeWe for comment.
At the time of the Selfridges purchase, 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.”
Dieter Berninghaus, chairman of the executive board of Signa, said the new owners would continue to prioritize sustainability at Selfridges.
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.
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, 2023, 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.