Rise of the phoenix department store
Billionaire Philip Day aims to revive a dying breed in an old BHS site – and has filled it with brands he bought from bankruptcy
THE slow extinction of department stores may seem like an inevitability to anyone who witnessed the implosion of BHS last year.
Many are struggling against the internet, but billionaire Philip Day sees things very differently.
The former managing director of Aquascutum has been buying up bankrupt fashion brands for more than a decade, dusting them down and giving them a new lease of life. This weekend he has opened his first Days department store in a quiet corner of Britain to house them all.
The Carmarthen site, a former BHS store bought out when that group went bust last year, will house Day’s brands – Jaeger, Austin Reed, Country Casuals, Peacocks, Jane Norman and home brand Ponden Mill.
He is already planning to raise the profile of his new chain by opening branches in Newcastle and Bedford. Sources told The Mail on Sunday there will be more.
Day began by buying Edinburgh Woollen Mill in 2002 and now has a collection of brands valued at more than £1billion.
Sources said while many of Day’s brands target an older shopper, he has also collected some younger fashion brands and the shops could provide a major pull in some town centres.
‘Most of us now regard the model as broken,’ said one retail director. ‘But maybe there is a gap for a truly discount department store where you can sell desirable brands at a compelling price.’
He said the best locations for Day’s stores were ‘away from the most expensive cities and high streets’ where lower rents mean the discount model works best.
The move could agitate rival retail billionaire Mike Ashley, who owns Sports Direct and Newcastle United FC. Ashley has long dreamed of owning a department store to use for his own raft of brands.
He tried to buy House of Fraser in 2014 before it was snapped up by a Chinese conglomerate and then this month he increased his stake in Debenhams to 16 per cent as its share price slipped.
Department stores have been struggling as consumers increasingly shop on the internet and the recent surge in retail sales failed to filter through. Figures from the Office for National Statistics showed department stores were the only part of the retail sector to show a fall in the volume of sales over the past 12 months.
Their huge overheads and inflexible property base mean they have struggled to reposition their businesses to suit the modern age.
Even John Lewis – which hopes to sell more than half its goods on the internet by 2019 – was forced to slash staff bonuses to 6 per cent of salaries early this year. This was the lowest for 63 years. BHS collapsed last year with the loss of 11,000 jobs and a £571million hole in the pension fund.
Meanwhile, Day seems to have a handle on the retail market. His most recent accounts indicate he paid himself a dividend of £31million for the year to February 2016. His Edinburgh Woollen Mill holding company made £90 million profits on sales of £576million.
Day has made a habit of buying unloved firms. Edinburgh Woollen Mill is understood to have been behind the purchase of the Jaeger brand shortly before other parts of the fashion firm went into administration this year. The purchase has not yet been officially confirmed by former owner Better Capital or by Day. But trouble could be on the horizon as a group of suppliers is deciding whether to take legal action over the manner in which the business was sold.
César Araújo, owner of Portuguese supplier Calvelex, said he and other suppliers from around the globe plan to discuss the matter this week. ‘We are not excluding the possibility of action against the directors and the former owners of Jaeger,’ he said.
Better Capital owner Jon Moulton told The Mail on Sunday last night there was ‘an extensive search for buyers over a considerable period’ and the sale was ‘the best available option’.
Day was not available for comment.