Is Shop Direct for sale with £3bn price tag?

By

Sandra Halliday

Published
Apr 26, 2017

Rumours of a sale have been swirling around Shop Direct for months and now it has been reported that the online fashion and general merchandise retail giant could be sold this year with a price tag of £3bn-plus being suggested.

The company’s management is believed to have meetings lined up with potential private equity buyers in the next few weeks. Advent International, Bain Capital, BC Partners, Cinven, CVC Capital Partners and Permira are all booked in, Sky News reported.

Reclusive owners the Barclay brothers are believed to be looking at a price of well over £3bn, although given the owners’ aversion to publicity, it’s unlikely that any concrete information will emerge until a deal has been done.

Shop Direct is turning out to be one of the winners in the UK retail sector as fashion shopping migrates online. It has successfully converted itself from a rather tired-looking catalogue and high street retailer to an e-tailer that embraces all that modern technology can offer via both budget brands and its more upmarket veryexclusive.co.uk operation.

Last year it added artificial intelligence to its MyVery app and also announced plans for a new London HQ and IT hub that would accelerate its use of advanced tech.

But even without such initiatives, its sales have been growing fast with a 9% increase in the seven weeks to December 23, at a time when many others in UK retail were struggling.

So will a sale actually happen? These things are never certain and the suggested price tag is certainly a large one. Sky News reported that some of the private equity firm expressing an interest are nonetheless concerned about the value of the business’s financial services arm. Shop Direct, as catalogue-based firms have done for decades, offers customers the chance to buy on credit and consequently has a huge financial services operation for which the owners clearly want a premium price.

But anyone buying the firm will certainly be getting a growing operation that is crucially expanding in the key m-commerce area. Almost two-thirds of its sales now come via mobile devices.

Buyers will also get a company with full-year profits of £150m in the last financial year and expectations of significant growth ahead.