Allders

Type: Public Company
Address: Centre Tower, The Whitgift Centre, Croydon, Surrey CR9 1WE, United Kingdom
Telephone: +44-20 8929 5500
Fax: +44-20 8929 5505
Web: http://www.allders.co.uk
Employees: 7,364
Sales: £510.55 million ($732.49 million)
Stock Exchanges: London
Ticker Symbol: ADS
Founded: 1862
NAIC: 452110 Department Stores

England's fourth largest department store group, Allders plc, operates 40 department stores under the Allders Department Store and Allders-At-Home names, with nearly three million square feet of retail floor space. The company's 20 Allders Department Stores--located chiefly in England's High Streets and shopping malls--feature the full complement of typical department store items, with an emphasis on furniture and home furnishings. In an attempt to expand beyond its traditional appeal to middle-income, middle-aged consumers, Allders has boosted its clothing range in the late 1990s, adding a number of fashionable brand names, including Adidas, Calvin Klein, Timberland, and DKNY, among others, but also by introducing a number of its own labels. New Allders clothing labels include Hydrogen, featuring sportswear aimed at the executive shopper, and Act3 and A-Grade, aimed at the youth fashions market. Other new Allders-owned brand names include Cooks & Co. and Episode and encompass the company's aim to offer consumers leading-edge fashions at low prices. Most of the company's clothing is manufactured in the United Kingdom, with some accessories and materials supplied from Hong Kong and India. Supporting its new fashion lines, Allders has launched a national advertising campaign designed to give the company a new look among consumers. In addition to its department stores, Allders has also taken a page from the American retail market by opening its own warehouse-store concept, the home furnishings specialist Allders-At-Home. Primarily located in extra-urban and 'edge-of-town' commercial districts, the Allders-At-Home chain, introduced in the mid-1990s, has grown to represent nearly half of Allders's total property portfolio. In addition to its physical stores, Allders is moving to capture a share of the Internet consumer budget, launching a full-service on-line wedding gift and registry boutique in October 2000. The company plans to expand its Internet commerce activities with two more on-line boutique sites as early as 2001. Led by CEO Harvey Lipsith, Allders, formerly part of conglomerate Hanson Plc, trades on the London Stock Exchange and posted revenues of nearly £511 in 1999. The subject of a failed acquisition attempt by larger rival House of Fraser in 1999, Allders itself approached smaller retail group Bentalls. When that acquisition fell through as well, Allders opened its £150 million war chest to purchase four stores from the struggling C & A retail group. Most observers--including Allders itself--continued to expect a consolidation of the United Kingdom's retail industry in the face of increasing economic globalization and the rapid growth of an Internet-based economy.

The first Allders department store was opened by Joshua Allder in Croydon, in the southeast of England, in 1862. The Allders name soon was found on other retail locations, remaining primarily in its southeast region. By the end of the 1920s, however, the Allders stores had come under the ownership of the growing retail group, United Drapery Stores, which nevertheless kept the Allders brand name for its department stores.

United Drapery Stores began a push to become the United Kingdom's largest retail group at the end of World War II, as the British economy, spurred by the need to reconstruct after the ravages of the war, joined much of the rest of the western world for an extended period of strong growth. United Drapery Stores, later the UDS Group, began adding to its collection of retail signage, adding such store names as Claude Alexander, Richard Shops, and Fifty Shilling Tailors.

By the 1960s, UDS Group had succeeded in taking the lead as the United Kingdom's top retailer, with a 1,300-strong empire of retail shops. The end of the postwar economic boom, which collapsed abruptly in the early 1970s after the Arab Oil Embargo, not only sent oil prices spiraling upward, but introduced an extended period of high inflation and recession that dramatically depressed the United Kingdom's retail market, while also encouraging consumers to change their shopping and buying habits. The UDS Group, however, had been too slow in recognizing and responding to the changes in the retail market. The UDS Group soon found itself burdened by too many retail store concepts--selling everything from shoes to clothing and other goods--that proved poorly adapted to the new retail climate. As the company's fortunes dwindled in the late 1970s, its independence was more and more threatened.

Meanwhile, the UDS Group had entered a new retail arena, that of the duty-free shop, when it acquired the license to open and operate the shop at London's Heathrow airport. Attached to its Allders department store division, and later operated as Allders International, the UDS Group rapidly built up its network of duty-free shops around the world. By the end of the 1980s, Allders International had taken second place behind market leader Duty Free Shoppers Group Ltd. The concept of duty-free goods--exempted from import, excise, and sales taxes--proved highly successful as the numbers of international travelers booked steady increases in the late 1970s and early 1980s. A feature on many cruise ships since the 1930s, duty-free first came to international air travel at Ireland's Shannon airport, a major refueling site for transatlantic flights. The rising rate of international travel during the 1960s and 1970s helped the duty-free shop to become commonplace not only in the world's airports, but also in its harbors, border train stations, and other border crossings. Allders International joined in the drive to take the duty-free shop worldwide, and by the end of the 1980s, most of its duty-free revenues was generated outside of the United Kingdom and more than 75 percent was generated outside of the European Community zone.

If UDS Group saw success with its duty-free shops, the rest of its retail store empire was crumbling fast. By the early 1980s, the company was placed on the auction block. Winning the battle to take over the UDS Group was the fast-growing conglomerate Hanson Trust, led by Lord Hanson, in 1983. The Hanson Trust had by then already gained nationwide popularity for its aggressive growth. Its continued growth in the 1980s became for many the perfect illustration of Thatcher-era free market capitalism, as Hanson swallowed up not only a vast array of international companies, but also a number of the United Kingdom's largest companies in the first half of the 1980s, including battery manufacturer Berec (later renamed as British Ever Ready), London Brick, and Imperial Group, as well as the UDS Group.

Hanson Trust's commitment to its shareholders above all else was widely applauded in the 1980s as the conglomerate rapidly gutted its acquisitions--eliminating management, slashing payrolls, eliminating research & development and other 'unprofitable' investments, while also selling off its acquisitions' assets--in search of quick profits and low investments. As the decade wore on, Lord Hanson's short-term approach to business helped him to become one of the United Kingdom's most admired businessmen. The UDS Group was given the same treatment as Hanson's other acquisitions of the period, as Hanson broke apart the retail empire. By the end of the 1980s, what had once been the United Kingdom's largest retail group had been eviscerated of all but the Allders department store group and its Allders International subsidiary of duty-free shops.

Leading the conversion of the Hanson Trust's retail acquisition was Harvey Lipsith, who had served as Hanson's finance director before being placed in charge of restructuring the UDS Group into what was then renamed the Allders Group. The economic downturn at the end of the 1980s, brought on by the stock market crash of 1987 and the collapse of the building market, led Hanson Trust to join another economic trend of the decade--in 1989, the conglomerate agreed to spin off its Allders retail division in a management buyout led by Lipsith. For £150 million, Lipsith gained control of the group's six department stores as well as its high-performance chain of duty-free shops.

Lipsith began adding more stores to the Allders chain, while also launching the Allders name on a new concept. As much of the revenues generated at the Allders department stores traditionally came through its sales of beds, oriental rugs, and other home furnishings, the company decided to turn its expertise in this market to a new retailing concept being brought over from the United States, that of the warehouse 'category killer.' In 1993, Allders launched its Allders-At-Home home furnishings warehouse stores. Unlike its department stores, typically located in England's High Street urban shopping districts, the Allders-At-Home stores joined the growing ranks of extra-urban 'edge of town' retailers, attracted by the lower rents and the growing suburban consumer base. By 1993, the company operated 12 department stores and six Allders-At-Home stores.

As the worst effects of the recession began to subside in the early 1990s, Allders looked for funding to repay the debt from its management buyout and to continue its expansion. In 1993, the company went public, taking a listing on the London Stock Exchange. The initial public offering, worth £175, helped absorb the company's debt and also gave it the capital to expand its portfolio of store properties.

By then, Allders International was seeing the writing on the wall: the opening of the European Community's borders in 1992 effectively removed the need for duty-free shops, since no duties were charged among member countries. By 1995, proposals were being made to eliminate the EC's duty-free shops altogether. Despite protests from duty-free retailers and airports--which pocketed as much as 50 percent and more of store revenues--the end of the duty-free shop in the European zone was proclaimed for 1999.

Allders chose not to wait that long, and announced its intention to sell its 128-strong network of duty-free shops. First approached by SwissAir--which sought to develop its retail network, duty-free or not--Allders was quickly caught up in a bidding war, as newly privatized BAA, which held the monopoly on England's airports, placed a bid on the Allders International operations as well and suggested that it might evict Allders International's stores from its airports if the bid was not successful. However, after SwissAir topped the BAA bid with one worth £160 million, BAA dropped out of the bidding, and Allders International was sold to SwissAir in 1996.

Allders promptly turned over a large share of the sale to its shareholders--who also were rewarded as the stock market welcomed the 'simplified' Allders--then took the rest on a buying spree. In 1996, the company bought eight stores from the Owen Owen chain for about £23 million. This purchase was followed by seven more stores, bought for £3.8 million from bankrupt furniture chain Maples, in 1997. While the former Owen Owen stores were refurbished and converted to Allders Department Stores, the Maples stores were placed under the Allders-At-Home banner. Meanwhile, the 'simplified' U.K.-oriented Allders was greeted warmly by stock market analysts.

Allders continued to add new stores during 1998, including seven Allders-At-Home stores and four new Allders department stores, giving the company a total of 38 retail locations, including its Croydon flagship--and largest--store. In 1998, the company also stepped up an effort to rejuvenate its image among shoppers, started in 1997 with the launch of its first private label, A3. In 1998, Allders launched a second label, A-Grade, and announced plans to roll out more labels, including the plus-sized range, Anagram, and the Hydrogen range of 'executive' sportswear. These brand rollouts were accompanied by the introduction of a new variety of popular fashion labels in the Allders Department Stores, as the company brought in such brand names as DKNY, Calvin Klein, Timberland, Adidas, and others.

Allders nearly gave up its independence in 1999, however. In May of that year, the company announced that it had entered--and broken off--talks with House of Fraser that would have seen the larger retailer acquire Allders Plc. After House of Fraser's stock slipped, the two companies ended their acquisition discussion, while reserving the possibility of reaching agreement in the future. Both companies agreed that the United Kingdom's retail industry, challenged by increasing numbers of discounters on one end and the blossoming of Internet-based commerce on the other, was ripe for consolidation.

Mid-sized Allders admitted that in the coming consolidation it could easily be prey for its larger competitors or predator itself for its smaller rivals. Indeed, in the first half of 2000, the company showed its predator side, announcing that it had amassed a war chest of some £100 million. The company appeared ready to take its war chest on the war path, when it made acquisition overtures to the Bentalls chain of eight department store. Those talks ended without success, however.

In August 2000, Allders made a deal with real estate and building group Minerva to sell its flagship Croydon store and lease a new, larger store in a new shopping center. The sale netted Allders some £50 million, a portion of which the company promptly spent, buying up four department stores from the C & A store chain in October 2000. At the same time, Allders moved to stake a position in the growing Internet-based retail scene, opening its first full-scale commercial web site. The site, devoted to wedding registry and gift sales, was expected to be joined by two more commercial sites in the year 2001. Nonetheless, the company continued to assert that consolidation in its sector was inevitable; it remained to be seen whether the Allders name would be able to ride out the coming consolidation wave.

Principal Competitors

Arcadia Group plc; ASDA Group Limited; Debenhams plc; The Great Universal Stores plc; House of Fraser plc; James Beattie plc; John Lewis Partnership plc; Marks and Spencer plc; Matalan plc; N Brown Group plc; Next plc; Selfridges Plc; Storehouse plc.

Further Reading

Bethell, James, 'Optimistic Allders Increases Profits,' Independent, December 13, 1994, p. 32.

Cowdy, Hannah, 'UK's Allders Says Could Raise 100 mln stg for Buys,' Reuters, May 31, 2000.

Osborne, Alistair, 'Allders Plc--Acquisition,' RNS, October 20, 2000.

------, 'Allders Raises BP100 Million War Chest,' Guardian, June 1, 2000.

------, 'Merger `Inevitable' Claims Allders,' Daily Telegraph, December 1, 1999.

— M.L. Cohen

Allders in Croydon, the fourth-largest department store in Britain

Allders is an independent department store in Croydon, established by Joshua Allder in 1862. It is the fourth-largest department store in the United Kingdom.

The Croydon store was the flagship of a large chain of department stores in the UK. The chain went into administration in 2005 and was subsequently broken up and sold, the Croydon store being purchased by Harold Tillman, owner of the Jaeger clothing company.

Contents 1 Joshua Allder 2 Growth and decline 3 Administration 4 Renewal 5 Development threat 6 References 7 External links

Joshua Allder

Allders was opened in 1862 at 102 and 103 North End as a 'linen draper and silk mercer' by Joshua Allder (1838-1904) from Walworth, who had served his apprenticeship in Croydon. His shop was diverse, with special offers on silk dresses and also a morning dress section, and departments offering lower-cost items such as buttons and ribbons. This diversity showed a shrewdness in business and an understanding of his mostly female customers.

Croydon was a growing town, and Allder's business grew with it. It was not long before the shop expanded into 104, 106 and 107 North End – he had to wait for some 20 years to get 105, a bakery. The wealth Allder made allowed him to play a prominent part in the local community, on the local board of health, on the council of the County Borough of Croydon for nine years and in the non-conformist church community. He supported greater rights for his workers, being instrumental in getting local stores closed for a half-day on Wednesdays. Allder died in 1904 leaving a store which had expanded beyond clothing and haberdashery to sell glass and porcelain, for example.

His main residence in Pampisford Road, South Croydon, now houses Regina Coeli RC school, and two cul-de-sacs nearby are named Allder Way and Joshua Close.

Growth and decline

In 1908 Allder's family sold the business to J.W. Holdron and F.C. Bearman, owners of stores in Peckham and Leytonstone respectively. They developed the store into 50 departments with 500 staff and owned the business until 1921. It then passed to the Lawrence family, under whose control it became a limited company. In 1926 the famous North End facade was created, uniting the frontage of the premises for the first time. In 1932 the Arcade from North End to George Street was completed, which proved very popular with its varied concessions, a herald of shopping malls of the future. Allders was considered a pioneering retailer.

The building suffered considerable damage in World War II but never closed. The refurbishment saw improvements, including the takeover of a cinema auditorium as the gift department and Croydon's first escalators in 1954. By 1958, the Lawrence family was forced to sell as a result of death duties incurred after the death of Daniel Arthur Lawrence, managing director. The store was acquired by Jack & Bernard Lyons' United Drapery Stores, owners of Richard Shops, John Collier, Alexandre Tailors and several department stores. The son of D.A. Lawrence, S. John Lawrence, was kept on by UDS as Managing Director. Allders continued to expand, reaching £1 million turnover in 1958 and £3 million by 1963. Fashion's importance declined, with household items taking a greater role.

In the 1960s there was considerable change in Croydon, particularly the construction of the Whitgift Centre to the north of Allders, into which the store expanded, and the creation of the St George's Walk development. Transport and lifestyle changes led to greater competition with the West End and further improvements were required to modernise the store. The section fronting George Street was rebuilt and expanded, retaining a Victorian facade, alongside a new addition. Rebuilding works continued into Dingwall Avenue and by 1976 Allders had 1,700 staff and 500,000 square feet (46,000 m²) of floor space. It was a Croydon landmark and the fourth-largest department store in the UK, after Harrods, Selfridges and John Lewis in Oxford Street. It had the largest carpet department in Europe, amongst other claims. Croydon was by this time a major retail centre.

Allders' immediate competitor, Kennards, was renamed Debenhams in 1973, along with many other Debenhams stores. To compete with the central buying and advertising of Debenhams and other larger groups, the department stores owned by UDS were all gradually renamed Allders. This process began with Shinners of Sutton in 1979 and later Hinds of Eltham, Medhursts of Bromley, Pages of Camberley, Willis Ludlow of Hull and Landport Drapery Bazaar (LDB) in Portsmouth. Only Arding & Hobbs at Clapham Junction in London and the furnishing store of Clover at Kirkstall in Leeds retained their original identities. A new geometric logo of ten orange 'A's arranged in a circle on brown and cream-coloured stationery, bags and carpets appeared across the group, together with the phrase 'All that a great store should be'.

In 1983 the Lyons family sold the UDS Group to Hanson plc and Allders became a flagship company of the group, with Lord Hanson appearing on Allders' roof in TV adverts. Allders expanded with new stores opening in Basildon and Chatham and in many international airports as duty-free concessions. A new 'Fourth Floor' was built on the roof of the Croydon store to house a new Audio and Television Department and two new restaurants as well as a link into the staff areas of London House on Dingwall Avenue. The group's brown, cream and orange livery was replaced with a scheme of light blue and gold lettering on a dark blue background.

In 1989 a management buyout saw the international arm spun off as a separate company. There was continued upheaval in Croydon with the complete refurbishment of the Whitgift Centre and of parts of the store. The vast carpet department was contracted to a secondary location allowing for the creation of a new perfumery and cosmetics hall at the centre of the ground floor. A new Allders store of 137,000 square feet (12,700 m²) opened at Woking in 1992. Allders plc was floated on the stock market in 1993.

The growth of the group rapidly accelerated following stock market flotation with the acquisition of existing stores and the building of new ones. This began with the acquisition of Nottingham department store Farmers (renamed Allders) and the development of a chain of stand-alone home furnishing stores. The opening of a second Clover store at Rotherham was succeeded by the development of 'Allders At Home', a concept for new stores in out-of-town retail parks, the first of which opened at Aylesford in Kent in 1994. The Clover stores were both rebranded.

In September 1996 Allders purchased a number of department stores from the Owen Owen group that traded under the Lewis's and Owen Owen names. This included branches in Basingstoke, Coventry, Ilford, Leeds, Oxford, Redditch and Slough.

In 1997 Allders acquired the bankrupt Maples furniture brand and seven of its retail outlets. These stores were integrated into the Allders At Home portfolio and brought the brand to town centre locations in Bromley, Chelmsford, Crawley, Kingston upon Thames, Reading, Sutton Coldfield and Watford. The Bromley outlet, in direct competition with the town's main Allders store, was soon disposed of. The Kingston store, offering a range focussed solely on furniture, beds and carpets, struggled to compete with Bentalls and John Lewis. This competition in the town and the frontage of the store being obscured for some time whilst work on the Kingston Bridge was carried out led to the store's closure within two years. A second Kingston store was later opened in the former C & A building, offering a broader range of merchandise for the home.

Shares in Allders crashed in 1998 after disappointing sales and difficulties integrating the Maples furniture group. Nevertheless it continued a policy of expansion, acquiring the premises of the former C & A stores at Guildford, Kingston upon Thames, Leicester and York in 2000 and later the large C & A building on the south side of Oxford Street in London. Problems continued, however. In Croydon, there were plans to build a new shopping centre, Park Place, on the store's site and much of the area to the south. A new Allders would be built opposite the Town Hall. Croydon Council's partner in this plan was developer Minerva plc. In late 2002 Minerva was part of a new group called Scarlett Retail that bid for Allders, with Lehman Brothers investment bank and a management team including Terry Green, the former chief executive of Debenhams and BHS. There had also been rumours of a merger with House of Fraser or a combined bid from Allders shareholder Tom Hunter.

Some felt at the time that Scarlett's bid was based on Minerva's intention to acquire Allders' site for its Park Place project, in order to sell the plot to another retailer, probably John Lewis. The bid was felt by many to be overpriced. Nevertheless, Scarlett paid Tom Hunter an improved price and they landed the company in early 2003 for about £162m ($316m). Green became chief executive and set about an overhaul of Allders' image. Much of the traditional homeware, haberdashery and clothing for middle-aged, middle-income women was reduced, with a new emphasis on young fashion and beauty products.

Administration

In September 2004, Minerva announced that Allders had made a loss of £22.6m for the year to 30 June 2004,^[1] blaming the speed of the transformation of the business. In December, it announced the business was up for sale. There was some early interest that Primark was to purchase some of the stores^[2] but no interest was found in taking on the company as a whole and it was placed in administration on 26 January 2005. It was revealed that there was a pensions deficit of £15 million. 130 of the staff at the Croydon headquarters were laid off, including Green and other senior managers. An under-construction store at the Drake Circus shopping centre in Plymouth was never opened and was split into stores for Next and Primark when the centre opened in October 2005.

Kroll, the administrators, searched for buyers for the chain or individual stores. Of Allders' 45 stores, only 35 received offers, with rival retailers such as House of Fraser, Bhs, Debenhams and Primark said to have expressed an interest. The ten remaining stores, including the Oxford Street branch, began closing-down sales on 5 February and had started to close from March 2005: all had closed by May 2005 with the Leeds store being the last to close down on 22 May 2005 (with exception of Croydon).^[3]

Renewal

In May 2005 it was announced that the owners of Jaeger would take on the flagship Croydon store and that it would continue to trade as Allders. In the first year of operation the new Managing Director, Andrew MacKenzie, has turned the fortunes of the company around and has projected a £1 million gross profit. Significant investment has been made to attract back to the store its Croydon audience. It is now the only Allders.

Development threat

In April 2006 it was announced that Allders had secured an extension to their lease through to 2008 ^[4] safeguarding the jobs of almost 1,000 employees.

The land and store that Allders lease has regular break clauses to the benefit of the 'virtual freehold leaseholder' held by Minerva subsidiary companies for 250 years. The freehold interest is held by the Croydon Whitgift Foundation, following a deal in the lead up to the compulsory purchase order with Minerva to ensure their long term financial interests (they were founded in the late 16th century).

The council has an unamended development agreement with Minerva for a two-phase development, the first phase south of George Street, the second phase north of George street. At the time that the Allders chain went into administration Minerva announced that the development was to be in a single phase that includes demolition of the Allders store and a five-year wait until the new development is completed. This would be untenable for Allders. The development agreement between Croydon Council and Minerva is based on a two-phase development enabling Allders to stay on site until their new store was completed and fitted out. The Conservative administration elected in May 2006 of Croydon Council is intent on securing John Lewis as the anchor tenant, but this does not fit in with the development as granted because John Lewis does not require a department store of the size that has to be built by Minerva.

Two options exist for Minerva:

1. to put a new planning application in for a smaller development with a store suitable for John Lewis
2. to negotiate with Allders to anchor the new development, as originally envisaged.

It is thought that Minerva is particularly worried about scenario (1) since its share price is based on the large development already granted with planning permission – any new application would also take at least a year to work through the system and so delay the development significantly. Croydon Council has stated publicly that it is not in discussions with Minerva on a new planning application. It has also stated that the development agreement has not been amended in any way.

Minerva has a development agreement of its own with Lend Lease to develop the project, subject to securing an anchor department store.

The overall viability of the Minerva plans (1.08 million sq.ft shopping centre) has been thrown into doubt following the construction of the 1.615 million sq.ft Westfield London shopping centre development at White City and the existing 1,300,000 sq ft (121,000 m²) shopping development at Bluewater to the east of London.

References

1. ^ http://news.bbc.co.uk/1/hi/business/4077705.stm
2. ^ http://www.fashionunited.co.uk/news/allders.htm
3. ^ http://news.bbc.co.uk/1/hi/england/west_yorkshire/4570725.stm
4. ^ Allders safe for two years, Croydon Guardian

• Memories of Croydon (1999), various authors, ISBN 1-900463-19-9.

External links

• Official website

Coordinates: 51°22′28″N 0°06′01″W / 51.3744°N 0.1003°W / 51.3744; -0.1003

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