EXCLUSIVE INTERVIEW: La Senza’s Mohammed Alshaya

Recession in Europe? Try telling that to Mohammed Alshaya, who last month snapped up 60 La Senza UK stores, marking his biggest investment to date in the UK. Can it work? The self-styled king of retail has a knack of doing the right deal at the right time.

By Anil Bhoyrul

He’s on a roll. Sharp talk. Quick wit. Smart deal. “I want to begin the interview by asking you a question for change,” says Mohammed Alshaya. “Does your wife ever get bored of buying lingerie?”

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We could end the interview there and then, as the executive chairman of retail giant M.H. Alshaya explains the reasoning behind a deal to take over the UK business of La Senza, bought out of administration last week. Over 1100 jobs have been saved across 60 UK stores, and with a total planned investment of $155m, watch out for new designs, new collections and a new shopping experience.

But more than anything else watch out for Mohammed Alshaya. The British High Street maybe in crisis and Europe staring at a double dip recession. However, the self-styled king of retail knows when to buy and what to buy, and he has a history of getting it spectacularly right: today the Alshaya Group operates more than 55 international retail brands in 19 countries, employing over 22,000 staff in more than 2,000 shops. If the recession separates the swimmers from the sinkers, Alshaya is the retail world’s answer to Michael Phelps.

“We are not a public company, so I don’t have the pressure of Wall Street pushing me to deliver short term gains. We are going –inshalla – to work hard to meet our goals. Those with a vision of how to grow a business have to take some calculated risks, and yes this is a calculated risk,” he says, adding: “But seriously, how many women do you know that don’t like buying lingerie? In a recession they may limit their purchases of other items like skirts, but my opinion is they won’t stop buying lingerie.”

Alshaya already has strong ties with Limited Brands Inc, the US-based owner of the La Senza brand. It owns the Middle East franchise for the Victoria’s Secret and Bath & Body Works brands and already operates La Senza in Russia. The deal will see much of the new investment go into refurbishing the existing stores, giving them a “brand new feel” over the next two years. Alshaya is of course no stranger to UK brands, also owning the overseas franchises for Mothercare, Debenhams, Boots, Next, River Island, Topshop, Miss Selfridge and The Body Shop.

But the deal is a major strategic shift – apart from Pinkberry last year, this is only his second physical presence in the UK high street, and by far his biggest. The move comes at a time when UK retail insolvencies are forecast to reach the highest level in four years as weak Christmas sales leave chains struggling to meet rent costs. Increasing numbers of shops are expected to collapse into administration or announce store closures as the consumer slowdown takes a stranglehold on the UK high street.

The Centre for Retail Research said 31 major retail companies fell into receivership last year with 24,025 jobs affected. Just last week Tesco saw its shares crash 15% on the back of poor Christmas trading.

However, Alshaya is confident he can make the deal work. “I am mindful of the challenges the UK is facing but personally I think these are medium term challenges, maybe four years at the maximum. Just because we are not a public company doesn’t mean we are accepting lower returns. The key difference, and it is a very key difference, is that we always have to make the right investments. That means we have to invest for the medium to long term, and we have to accept a growth rate that is good for us,” he says.

He adds: “Look at real estate. Some places in the world will give a 4% return on asset value; some place will give you 12% – three times more. Now is the 4% model stupid? No. Is the 12% model crazy? No. It all depends on the business, the product and the market. We are not doing this to just try and turnaround the company and sell it. We are not a private equity firm that wants to take over a business for four years, create value and sell it. That’s not us, that’s not what we do. We are in this for the long haul.”

Alshaya says he will be busy working closely with La Senza in the coming months, but won’t rule out more UK deals. “We are looking at some ideas for the medium and long term.”

His track record suggests he will find some. Throughout the Middle East and North Africa, Russia, Turkey, Central and Eastern Europe, he has grown the world’s leading brands in fashion and footwear, food service, health and beauty, pharmacy, optics, home furnishings and office supplies.

Any hint of slowing down? Forget it. “Our strategy for the long term is to diversify into new markets, new economies and new products. That’s exactly what we are doing.”



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