Business Irish

Saturday 3 December 2016

The retail royalty eyeing Arnotts

Galen and Hilary Weston look set to add the Henry Street department store to their Irish portfolio, which includes Brown Thomas. We report on the potential takeover tipped as the saviour of Northside shopping in the wake of Clerys' demise

Published 26/07/2015 | 02:30

Power couple: Hilary and Galen Weston
Power couple: Hilary and Galen Weston
Alannah Weston

Real-life Mr Selfridge Galen Weston looks set to bag another prestigious Irish department store, it emerged this week. Following months of speculation in the property world, the British-Canadian billionaire has been revealed as the mystery backer of developer Noel Smyth's bid to takeover Arnotts.

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Department store dynasty the Westons already own Brown Thomas in Ireland, Selfridges in the UK and Holt Renfrew in Canada.

Now a submission to the Competition and Consumer Protection Commission has confirmed that the family is poised to snap up the Henry Street shopping destination too.

Welcoming the rumoured €100m deal between the Westons' holding company Wittington Investments and Smyth's Fitzwilliam Finance Partners to buy out rival shareholder Apollo, retail consultant Eddie Shanahan told Review: "If you look at where Arnotts was trading before the boom, and where it's trading now, there are lots of reasons to welcome an experienced international retailer like Galen Weston coming into the store.

"Arnotts' offering has become very confused in recent years, and a lot of loyal customers - myself included - have deserted the store.

"In terms of strategic management, I think this would be a very good thing for Arnotts. After several years of lots of different versions of the Arnotts, the brand would finally go in a definite direction - something that would benefit shoppers, staff and suppliers alike."

Following in his father's and grandfather's footsteps, Weston patriarch Galen first burst on to the Irish scene with his own supermarket chain, Powers - later rebranded as Quinnsworth - after moving to Dublin in the early 1960s.

In 1966, he became one half of Ireland's original power couple when he married top model Hilary Frayne, to whom he's still wed.

Three years later, the young entrepreneur took a punt on a broke department store called Todd Burns, today better known as Penneys, and the rest is high street history.

"Ireland in the early 1970s was in a depressed economic state," told the famously private businessman in a rare interview in 2011. "You could buy shops for almost nothing so I bought a whole bunch of them and then I had to fill them.

"Hilary herself made the first dress we sold and because she always loved fashion we later bought Brown Thomas together."

Ten billion dollar man Galen first teamed up with Fitzwilliam to buy €140m of Arnotts' loans from Ulster Bank in 2013, with US investment firm Apollo nabbing the rest of the retailer's debt from the Irish Bank Resolution Corporation (IBRC), the former Anglo Irish Bank.

As the 50:50 shareholders battled for full control of the iconic department store and its adjoining properties, the 74-year-old magnate was thought to have bowed out of negotiations earlier this year, paving the way for the Livingstone brothers to enter the race instead.

Now experts reckon Galen could be just the multi-billionaire to help resuscitate Dublin's 'Northern Quarter' - the doomed development project that led to Arnotts being taken over by the banks in the first place.

"Henry Street is still referred to as being part of the Central Business District," says Carol Tallon of the Irish Property Buyers' Handbook. "If you look at the triangulation of vacancies around Arnotts though, it's really only CBD-adjacent.

"Dublin 2 has been talked about in terms of regeneration for years, but so far, it hasn't happened.

"Estate agents might tell you that the closure of Clerys is a good thing for Arnotts - actually the opposite is true as they're losing whatever footfall was drawn to the store.

"It's quite telling that Irish funds showed little more than a passing interest in Arnotts," she adds. "However, Galen Weston clearly knows a lot about his business, and obviously he sees something in Arnotts that others didn't.

"He's not just taking a chance on Arnotts as it exist, he's taking a chance on the future of the area. For the sake of our capital, we can only hope that whatever the Westons see in Arnotts truly exits."

Boasting an operating profit of €12.5m on an increased revenue of €120m for the year ending 2014, already the department store appears to be enjoying the Selfridges effect.

Galen bought the high-end British chain made famous by the ITV show for £598m (€850m) just over a decade ago. Today, it's believed to be worth over £1bn. Anyway, the famed philanthropist - whose family last year donated $50m to set up the Weston Brain Institute to research diseases such as Parkinson's and Alzheimer's - doesn't have to look too far for advice on his latest investment.

The couple's daughter, Alannah, is creative director of Selfridges, while son Galen Jr runs the Weston's supermarket megachain, Loblaws, in Canada, where the family returned from Wicklow after a foiled IRA kidnap attempt in 1983.

Now settled in the UK, Dún Laoghaire native Hilary - who's worked alongside her husband for five decades - says Brown Thomas is still the jewel in the crown of the Weston empire.

"Working at Brown Thomas was such fun," recalls Hilary, who - lore has it - received the Grafton Street store as a wedding gift from her husband. "It is part of Irish retail history.

"I believe the Irish know that and support it through thick and thin."

Back on the Northside, Weston is now widely tipped to try to reposition Arnotts, which employs 500 people, as a mid-market store just below Brown Thomas.

"The north city centre is wide open to any retailer with a really credible consumer offering," reckons expert James Burke. "As proven global operators, the Westons have a great opportunity to so something ground-breaking with Arnotts.

"It's definitely not a short-term investment - but I think Galen Weston, in particular, will see this as a prime opportunity to get in early and create something different. What they'll be trying to do is get ahead of the consumer, rather than running after the consumer when it's too late, like Clerys."

And, having already previously approved the move, the competition authority seems unlikely to stand in the Irish-Canadian consortium's way.

"I don't see any conflict of interest," says Eddie Shanahan. "In terms of retail, Ireland is a small market - but you will get customers in the door if you seduce them.

"Brown Thomas isn't going to compete with itself."

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