Comment: Debate on public versus private retailers doesn't tell whole story

In this column last week, which coincided with the Oracle Retail Week Awards, Fran Minogue contrasted public and private company ownership.

This topic merits further examination against the backdrop of the award-winners themselves.

The winners, comprising 12 retail companies and one property group, cut a neat symmetry across the sector: four food (Aldi, Asda, Lidl and Tesco), four hard goods (Ao.com, Dixons, Screwfix and The Entertainer) and four fashion/department stores (Asos, John Lewis, Primark and Ted Baker).

On paper, the ownership classification is similarly symmetrical. Three are wholly private: Aldi, Lidl and The Entertainer; three are in the FTSE 100: Primark (AB Foods) Screwfix (Kingfisher) and Tesco; three are in/approaching the FTSE 250: Ao.com (imminent), Dixons and Ted Baker. And there are three others: Asda (foreign-owned), Asos (AIM-listed) and John Lewis (a partnership).

“The IPO door that is currently wide open can blow shut again when the winds change”

But the process of categorisation is far from clear-cut, and the dichotomy of public-private ownership is an inadequate point of differentiation.

The conventional view (and one echoed in loud voice by Philip Green inter alia) is that Plcs are distracted from the business of running the business by the constant demands of disclosure, quarterly reports, analyst briefings and investor roadshows. But other scenarios can be painted when elements such as the degree of free float, or the status of subsidiaries, come into the picture.

Ted Baker might well be a listed company but it is one with a limited free float and firmly anchored to its founder and major shareholder, Ray Kelvin - a legendarily private person who’s no stranger to publicity and certainly not averse to public speaking, as he all too ably proved at the awards dinner last week. Ted Baker’s growth - not least internationally - has clearly not been hampered by demanding shareholders or activist investors.

The Weston family is equally skilled in ensuring that public status doesn’t necessarily stifle the entrepreneurial spirit and expansionist zeal of its subsidiary interests. ABF behaves as an impeccable public parent while giving free rein to its infant prodigy Primark, and profiting nicely in the process.

The absence of private equity-backed players from the awards roll call this year is a telling tale of the times. But times change and the IPO door that is currently wide open can blow shut again when the winds change. And these winds often traverse the Atlantic.

The US retail sector has been fired by high-returning IPOs for the past four years, heralding the current upsurge in the UK. However, there is recent evidence that M&A is back in favour in the US, with high-profile deals recently being agreed between Hudson’s Bay and Saks, Signet Jewelers and Zale, and now Men’s Wearhouse and Jos A Bank.

Meanwhile, private equity activity is far from dormant - vide Investcorp’s purchase of Paper Source and TPG Growth’s acquisition of a majority stake in e.l.f. Cosmetics.

Public or private? It’s still not a one-way bet and more than one option can drive better deals.