Serial investor Baugur looks set for another year of frenetic deal activity, while Middle Eastern-based Landmark Group should also make its mark on the high street with a series of deals and speculative stakebuilding in UK retailers. The two companies are already working together on a deal to buy department store chain Saks in the US.
In terms of retailers, Debenhams could find itself a takeover target via a joint bid from Baugur and Landmark, which could see it merge it with Baugur-led House of Fraser.
Baugur is also likely to start cracking the whip at Mosaic Fashions, which has had a tough time integrating and managing its unwieldy eight-fascia operation this year.
Womenswear chain Whistles is likely to be spun off from Mosaic by Baugur next year. Other spin offs also look probable as Baugur attempts to maximise value and performance from Mosaic.
Baugur is also mulling a move for menswear retailer Moss Bros. However, it would not be easy to get such a deal past Moss Bros’ shareholders, who believe that the value of the company is well above its current share price.
Meanwhile, young fashion chain New Look could come back to market if performance is up to scratch. Landmark, which holds a 3% stake in the retailer and was among the failed bidders for New Look this year, could well try again.
Sports Direct founder Mike Ashley is likely to continue to grab the headlines next year and give the sportswear sector a lot more to think about. Although he has refuted speculation that he plans to return the company to private ownership, the rumours persist.
Drapers’ watch list for 2008:
Jagtiani is an ex-London cabbie who got cosy with Baugur last year. His Landmark Group runs 600 stores in the Middle East and holds a 3% stake in New Look. Landmark is part of the Baugur-led consortium eyeing Saks in the US. A week before Christmas, he bought a 7% stake in Debenhams, declaring he would make a full bid if someone would partner him. He has also been linked to smaller retailers.
Baugur is set to spin off Whistles, part of Mosaic Fashions, and install Jane Shepherdson as its new chief executive early next year. The market believes more spin offs could be in the pipeline, although these are unlikely to be complete sales to third party buyers. Watch out for Mosaic drafting in new talent next year too. Big industry names could be installed at those Mosaic brands without managing directors.
The footwear sector
Which footwear retailers will survive another year like 2007? There are set to be more casualties in this sector as Marks & Spencer and New Look hammer the specialists’ market share. Those at the top end are secure, but mid-market chains are in for another shocker. Look out for how Faith and Dolcis fare with new turnaround strategies, and it will be a surprise if Stead & Simpson, which includes Shoe Express, can pull off a complete sale.
After a train wreck of a year, Sports Direct owner Mike Ashley will have to work hard to prove that the business is, as he has claimed, worth 800p a share. The absence of the England football team from Euro 2008 will also chop about £50 million off sales. Meanwhile, a battle is breaking out between JJB Sports and John David Group, which seem to think young branded fashion is the market to be in. We’re not convinced.
2008 will bring the results of a strategic review of struggling menswear business Moss Bros, which could result in much-needed changes. The company has about £16 million of cash that could fund an acquisition, perhaps of SRG, and could also take over House of Fraser’s menswear operation if a deal goes through. Expect more senior management changes after several departures in 2007.