6th Feb 2023 17:22
(Alliance News) - Frasers Group PLC is considering buying up shopping centre assets, the Times reported over the weekend, as the fashion company expect bricks and mortar retail is here to stay.
The Sports Direct owner is in advanced talks to buy The Mall in Luton in Bedfordshire, England from Wells Fargo Co for GBP70 million, the Times reported.
Further, Frasers is considering to buy the Overgate centre in Dundee, Scotland from another potential seller, for about GBP30 million.
This would be a massive discount, as Legal & General Group PLC paid Land Securities Group PLC GBP125 million for Dundee's main shopping centre destination nine years ago
"Reports that Frasers Group is in final negotiation to buy two shopping centres for around GBP100 million indicates the company's expectation that a physical shopping experience will remain a super-important avenue in the future of retail. As the pandemic habits of virtual store browsing have rolled back, and shoppers have relished nosing around racks of goods once more, it's clear getting the multi-channel approach right is crucial," Hargreaves Lansdown analyst Susannah Streeter commented.
E-commerce grew in popularity over the pandemic as bricks and mortar retailers were forced to shutter due to lockdown measures. That online shopping boom has subsided since lockdown measures eased, however.
Numbers from the British Retail Consortium last month showed footfall in the UK over the festive period was the strongest since the outbreak of Covid.
The British Retail Consortium-Sensormatic IQ monitor showed retail footfall in December rose 15% from a year before.
In December, footfall in high streets rose 20% year-on-year, and by 13% in shopping centres, but retail park footfall fell by 1.6%.
Postal strikes also meant high streets became busier places in the run-up to Christmas, despite industrial action in the UK railway network.
HL's Streeter added: "Frasers Group has a track record of snapping up companies in the bargain bin, and clearly sees price opportunity in The Mall in Luton and the Overgate centre in Dublin after retail real estate value was severely dented by the pandemic rout."
Frasers shares closed 1.4% lower at 791.58 pence each in London on Monday.
By Eric Cunha, Alliance News news editor
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