Shake-up looms over sell-off of retail giants

HARRIS Scarfe and Best & Less have been sold to a private equity group in a major shakeup of the nation’s struggling department store sector.

Private equity group Allegro Funds, which specialises in turnarounds, has bought the businesses from household goods retailer Greenlit Brands.

The deal also hands Allegro the Australian arm of British department store import Debenhams and New Zealand plus-size women’s clothing chain Postie.

Allegro’s deal with Greenlit covers 322 stores and 6100 employees.

The key Harris Scarfe and Best & Less businesses compete against Myer, Woolworths-owned Big W and Wesfarmers-owned Target and Kmart.

Many of those businesses have struggled over the past decade as they confront fastfashion interlopers Zara, Uniqlo and Hennes and Mauritz, trading as H&M, along with the rise of online shopping.

They are also locked into expensive retail networks that are now bigger than they need.

Allegro managing director Fay Bou said the private equity firm was acquiring a suite of “iconic retail brands” that had a loyal customer base and passionate staff.

“We look forward to supporting a highly experienced management team to transform each of the brands,” Mr Bou said.

Brian Walker, the founder of consultancy Retail Doctor Group, said Allegro had its work cut out given the headwinds facing discount and mid-tier department stores.

“There has been a complete downturn of department stores globally,” Mr Walker said.

Neither Allegro nor Greenlit disclosed a sale price. The deal is expected to be wrapped up by early next month.

Greenlit also owns furniture and homewares chains Fantastic Furniture, Freedom, Snooze, Plush, OMF, Unitrans and FutureSleep.

Allegro says it targets businesses that are in industries experiencing headwinds or that are carrying too much debt.

It has invested $1 billion in businesses including Pizza Hut Australia and Carpet Court.