Thailand's 'Central Group' boosts European presence

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INVESTMENT
Central boosts European presence
Somluck Srimalee
The Nation


The exterior of the KaDeWe department store in Berlin, one of the three premium outlets of Germany

BANGKOK: -- CENTRAL Group is acquiring a 50.1-per-cent stake in the German premium department-store chain, The KaDeWe Group, in a move that will boost the Thai operator's sales in Europe from 600 million euro (Bt22.85 billion) last year to 1.2 billion euro this year.

"We also expect our sales from premium department stores in Europe to further double to 2.4 billion euro in the next three years," Tos Chirathivat, chief executive officer of Central Group, said during a telephone interview yesterday.

The group targets its European sales accounting for about 40 per cent of its overall sales value in 2020, he said.

Prior to the KaDeWe Group purchase, Central Group's sales from its department stores in Europe -La Rianscente in Italy, which it bought in 2011, and Illum in Denmark, which was snapped up in 2013 - contributed 9 per cent of its total sales worth Bt249 billion last year.

If European sales of 1.2 billion euro are achieved this year, they will represent about 15 per cent of its global sales target of Bt286 billion for the year.

The company has also set aside an investment budget of Bt5 billion to renovate KaDeWe's three luxury department stores this year and next, Tos added.

However, he declined to disclose the value of the deal to buy the major stake in the KaDeWe Group from Signa, a leading retail and real-estate company in Europe.

After the deal is completed, Central Group will hold a 50.1-per-cent stake in The KaDeWe Group, which operates the premium-end KaDeWe, Oberpollinger and Alsterhaus department stores, while the remaining 49.9 per cent will be held by Signa, which is based in Austria.

Since 2013, Signa has comprised two independent core businesses, Signa Real Estate and Signa Retail.

The former employs around 150 people, who manage real-estate assets worth 6 billion euro, while the latter is responsible for all of the group's retail operations.

Signa Retail owns and manages three businesses - KarstadtWarenhaus, Karstadt Sports and The KaDeWe Group - which are retail leaders of Germany, with more than 100 branches in total, employing more than 20,000 people and generating over 3 billion euro annually.

The budget to buy the stake in the German department stores comes from a combination of Central Group's cash flow and a bank loan.

The company expects to break even on the investment in 2017, said the CEO.

Tos said the group's latest investment is not part of a business plan to invest Bt40 billion to develop new department stores and renovate its existing branches this year.

The acquisition will serve as a significant addition to Central Group's continuing expansion in Europe, he added.

"We also are negotiating other deals, but they will take time to finalise, which is normally about two years for overseas deals," he explained.

The KaDeWe store is located in the heart of Berlin, Oberpollinger is in Munich and Alsterhaus is in Hamburg.

Each of the department stores has more than 100 years of history, and they are among the most established and well-recognised premium and luxury department stores in Germany.

Vittorio Radice, vice chairman of La Rinascente and Illum, described the three stores of The KaDeWe Group as "real jewels".

They will benefit tremendously from the synergy effect and the exchange of know-how from this strategic partnership, he said in a press release issued yesterday.

"We are focused on running a collection of unique iconic stores and are prepared for necessary investments to strengthen their long-standing reputation," he added.

Source: http://www.nationmultimedia.com/business/Central-boosts-European-presence-30261952.html


-- The Nation 2015-06-10

[ezzra]

I sure hope that their work permits and visas are in order, we don't want them to be refused

entry to Germany and turned back at the airport like that country in SE Asia and just because

they have been traveling in and out too often...

[elgordo38]

I sure hope that their work permits and visas are in order, we don't want them to be refused

entry to Germany and turned back at the airport like that country in SE Asia and just because

they have been traveling in and out too often...

Sales to double again in the next three years what are these guys smoking?

[naboo]

50.1% foreign ownership? Is that allowed?

[Sydebolle]

While the oligarchs of Thailand can buy 50.1+ of anything in Europe, buy residences and land in their own names they screw all those aliens with their short-sighted vision of Thailand is Thai.
Nobody in his right mind wants to tell me that CPA stores in Chiang Rai or Khon Kaen - for that matter - provide a professional retail return as in the West.
We will see; smart move by Tos Chirathiva though; a tip to the hat is in order ;-)

[Cake Monster]

I wonder how " Thainess " will be received in Europe ?

Customers down, so prices up, will not go down well.