Online retail giant in the mix as tycoons contemplate sell-off proposals
Shop Direct, the Liverpool-based online retailer, could be part of a shake-up of owner the Barclays brothers’ multibillion-pound business empire.
Weekend reports claim the family is considering trimming the huge portfolio, which includes Shop Direct, The Daily and Sunday Telegraph and top London hotel The Ritz.
Shop Direct, which is set to be renamed The Very Group to bring its name closer to its flagship retail brand, ‘Very’, last week reported much larger annual losses due to a surge in PPI claims, but the Barclay family view the Speke-based retailer as a long-term prospect and one unlikely to be offloaded.
The business, which has grown from the merger of the former Littlewoods pools and catalogues group and Manchester-based catalogues giant GUS, is based in the South Liverpool suburb of Speke, where it employs 1,500 staff.
Recent results revealed it had annual sales of £1.99bn in the year to June 30, compared with £1.95bh last year.
But it suffered a pre-tax loss of £185.5m, up from £24.7m the previous year.
This was due to exceptional items of £310.2m, which comprised a £241m increase in claims for PPI cover following a surge in claims in the run-up to the August claims deadline.
The company received 276,000 PPI claims in August 2019, compared with a typical monthly run rate of 40,000.
It said it is now evaluating a number of funding alternatives to address the increased liability.
However, the Barclays are believed to be keen to retain the business, which was created by Aidan, 63, and Howard Barclay, 59, sons of Sir David Barclay, through the acquisition of Littlewoods from former owners the Moores family, and the merger with GUS.
They have overseen a shift from the traditional catalogues business to digital online shopping.
Under restructuring proposals the business could be sold, but it is believed the two sons want to remain investors in Shop Direct.
They believe investments in logistics and new financial products for customers have yet to pay dividends for the retailer.
One possibility would be to sell a 25% stake to a sovereign wealth fund or private equity investor, with Barclay family members, who wished to, retaining a share of the remaining 75%.
Twins Sir David and Sir Frederick, both aged 84, amassed a fortune in the region of £8bn after embarking on building a property empire in London before diversifying into media, retail, hotel and shipping.
The review is understood to have been instigated because the family is no longer as united as it was on the group’s strategy following what one insider described as “a generational shift”.
One senior executive close to the Barclays is reported as saying: “Interests are no longer aligned in the way they once were.
“People want to invest in different things. People want different things.”
Sir Frederick is believed to be keen to offload the Telegraph newspapers, which the family has owned since 2004.
It is believed that reducing the group’s portfolio would generate the funds to allow a “buyout” of some family members.
Earlier this month The Times said the family was assessing interest from potential buyers for The Ritz, which was acquired for £75m in 1995 and is now valued at around £800m.
As part of the review it is anticipated that financial advisers will be appointed to value the businesses and seek buyers, which could take between 12 and 18 months to complete.
The family has refused to comment.