SEARS PLC PLANNING TO SPIN OFF SELFRIDGES IN BIG RESTRUCTURING
Byline: James Fallon
LONDON — Sears PLC, one of the U.K.’s largest retailers, announced Tuesday plans to spin off its Selfridges department store unit as part of a major restructuring of its operations.
As part of the restructuring, Sears’ chief executive Liam Strong, who has been under fire for his failure to improve the group’s performance, will resign.
According to Sir Bob Reid, Sears’ chairman, the restructuring will eliminate the need for a group chief executive, which is why Strong will resign in June. He will not be replaced.
Selfridges is one of London’s largest department stores in terms of sales and profits. The store had a 2.6 percent increase in operating profits to $57.7 million (35.5 million pounds) on a 7.4 percent rise in sales to $485.1 million (298.6 million pounds) in the year ended Jan. 31. Operating profits were 34.6 million pounds on sales of 278 million pounds the previous year.
Reid said the spinoff would take place sometime next year. The flotation of Selfridges will be the second stock market listing of a major London department store after Dickson Concepts International Ltd. of Hong Kong sold 49.9 percent of Harvey Nichols in April 1996.
Reid predicted the deal would place a value on Selfridges of at least $975 million (600 million pounds), although retail analysts said the slight improvement in the latest results places a question mark over that. The store, on Oxford Street, has been undergoing a $97.5 million (60 million pound) redevelopment program over the last few years to introduce more designer labels, improve customer traffic flow and boost its merchandising. New escalators have been installed, and a young women’s sportswear department called Spirit, which focuses on clubwear and streetwear, was opened.
Selfridges has increased the space devoted to such designer labels as CK Calvin Klein, Polo Ralph Lauren and DKNY, and is remodeling its ground floor beauty department, which is one of the world’s largest, with annual sales of about $29.2 million (18 million pounds). The department is one of the largest accounts in the world for Calvin Klein Cosmetics, for example.
Sears also announced Tuesday the sale of its Freemans mail-order business to Littlewoods PLC for $597.1 million (367.5 million pounds).