L Catterton’s $1.9B Value Retail stake targets China tourism

LVMH-backed private equity firm L Catterton has acquired a significant stake in Value Retail, the owner of Bicester Village, from UK shopping center landlord Hammerson. This £1.5 billion ($1.9 billion) deal provides £600 million ($774 million) in cash proceeds to Hammerson, allowing the company to focus on its core assets. Value Retail operates nine luxury retail outlets across Europe, including the popular Bicester Village near Oxford, along with two locations in China in Shanghai and Suzhou. L Catterton’s investment aims to leverage its operational expertise and extensive network to further develop the appeal of Value Retail locations, ensuring they remain a top shopping destination for luxury-seeking travelers from China. According to Michael Chu, L Catterton’s global co-chief executive, the investment firm was “eager to leverage our operational expertise and global network of established relationships” to partner with Value Retail. Yet, L Catterton’s strategic investment also signifies a calculated move to secure a stronger foothold in the lucrative Chinese travel retail market. With Chinese outbound tourism – and spending – roaring back to pre-pandemic levels, this demographic is once again vital for the luxury sector, with Chinese tourists consistently ranking among the top spenders in international markets. The Jing Take L Catterton’s investment in Value Retail could help it – and LVMH – capitalize on China’s outbound tourism revival, while also benefiting from the growth of China’s domestic tourism boom via Value Retail locations in Shanghai and Suzhou. In Europe, Value Retail’s outlets are strategically located in key tourism hotspots like Barcelona, London, Milan, and Paris, which are already highly popular with Chinese tourists, ensuring a steady flow of visitors. By enhancing these outlets' attractiveness through L Catterton’s operational capabilities, LVMH can better cater to the preferences and expectations of Chinese luxury shoppers. A significant aspect of this acquisition is the potential synergy with LVMH’s existing luxury travel retailer, DFS. DFS operates over 400 points of sale globally, including major airports and city-center Gallerias, which are strategically positioned to attract Chinese tourists. By aligning the offerings and experiences at Value Retail locations with DFS, LVMH has the opportunity to create a seamless luxury shopping journey for Chinese tourists. For Hammerson, the sale of its stake in Value Retail is a pivotal step in its turnaround strategy. The deal provides substantial liquidity, enabling Hammerson to reduce its debt and reinvest in its core urban retail assets, such as the Bullring in Birmingham and London’s Brent Cross. This focus on key properties is expected to drive higher returns and operational efficiencies. Looking at the bigger picture, L Catterton’s investment in Value Retail highlights the growing importance of experiential retail and – for outbound tourists – travel retail in the luxury sector. Value Retail outlets like Bicester Village, Fidenza Village, and Shanghai Village offer a curated shopping experience that appeals to the tastes of Chinese shoppers, who are increasingly eager to make a day of a shopping trip. More importantly, L Catteron’s investment could theoretically help raise the visibility of LVMH portfolio brands at Value Retail locations, much to the chagrin of rivals Kering or Richemont. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

L Catterton’s $1.9B Value Retail stake targets China tourism

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Published July 23, 2024

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L Catterton’s $1.9B Value Retail stake targets China tourism