Syed Mokhtar closes Harrods outlets

This article first appeared in The Edge Malaysia Weekly, on February 18, 2019 - February 24, 2019.
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TYCOON Tan Sri Syed Mokhtar Albukhary has quietly shut down his 18-year-old Harrods outlet in the Kuala Lumpur International Airport (KLIA) as well as two other outlets in Suria KLCC, ostensibly owing to continued losses.

It has been nearly eight months since the three stores — Harrods World of Signature at KLIA and Harrods World of Signature Shop and Tea Salon and Harrods Café on the first and ground floors of Suria KLCC respectively — ceased operations on June 30, 2018, although many do not appear to be aware of the closures.

Syed Mokhtar held the franchise in the form of a licence agreement through Tradewinds Premium Goods Sdn Bhd, a subsidiary of Tradewinds Corp Bhd.

Tradewinds Premium director Arief Nasran Abdul Wahab did not respond to calls and messages from The Edge on why the stores had been shut down. KLIA operator Malaysia Airports Holdings Bhd (MAHB) confirmed the closure of the store, saying that it was due to the end of its tenancy.

Interestingly, according to Tradewinds Corp’s 2010 annual report, there was a second Harrods World of Signature outlet at the satellite building in KLIA. This outlet is believed to have closed down in 2011/2012.

A search on the Companies Commission of Malaysia (SSM)’s website describes Tradewinds Premium’s nature of business as retailing of Harrods brand products.

According to its financial records, the company suffered net losses for three consecutive years from the financial year ending Dec 31, 2015. In FY2017, the company’s net loss widened to RM4.91 million from RM2.57 million in FY2016 while revenue declined to RM9.23 million from RM15.19 million. The company also saw its accumulated losses increase to RM22.48 million from RM13.85 million previously. As at Dec 31, 2017, its current liabilities totalled RM3.29 million.

Harrods, known for its iconic store in Knightsbridge, London, is synonymous with splendour and luxury. Malaysia welcomed the first Harrods store at KLIA on Aug 1, 2000. Located at the concourse level after the immigration counter, the store opened its doors two years after then owner Mohamed Al-Fayed visited Malaysia. The Harrods franchise was brought in by a Syed Mokhtar-linked company, Amtek International Sdn Bhd, a subsidiary of Amtek Holdings Bhd.

In December 2008, Tradewinds Corp purchased 100% equity interest in Amtek International and changed its name to Tradewinds Premium Goods.

A year later, the Harrods restaurant as well as a retail section that offered Harrods branded merchandise such as bags, mugs and teddy bears opened in KLCC. This was later followed by the opening of the street-level café at the entrance of KLCC near Isetan.

The licence agreement with Harrods Ltd was from Jan 24, 2008 until Jan 31, 2013. As Tradewinds Corp was delisted on Sept 26, 2013, details of the agreement are unclear. However, it is assumed that Tradewinds Corp managed to extend it at least up until the outlets’ closure last year.

When Tradewinds Corp purchased Amtek International for RM3 million, it said, “The acquisition will allow the group to capitalise on Harrods’ internationally-renowned reputation for luxury and exclusivity, raise our corporate profile and [is] as a stepping stone for the group to explore possible business collaboration and opportunities with Harrods Ltd for its future residential, commercial and hotel projects especially in Kuala Lumpur.”

Interestingly, in September 2013, news emerged that Harrods was planning to open a hotel in Kuala Lumpur. It was subsequently established that an integrated development dubbed Harrods Square had been planned on the site Restoran Seri Melayu had been sitting on in Bukit Bintang. Syed Moktar owns this land, which he acquired via a tender exercise.

Syed Mokhtar had partners in the project, namely Tan Sri Desmond Lim Siew Choon (of Malton Bhd and Pavilion Real Estate Investment Trust fame) as well as Qatar Holding LLC, a unit of Qatar Investment Authority (QIA). QIA, which bought Harrods department store from Al-Fayed for £1.5 billion in May 2010, is said to be the fifth owner. Al-Fayed had acquired Harrods, which was established in 1840, for £578 million in 1985.

By October 2015, the tripartite deal between Syed Moktar, Lim and QIA had fallen through and Malaysia lost the chance to host the world’s first Harrods Hotel. It will be interesting to see if Lim, in partnership with QIA, will decide to bring back the Harrods brand to Malaysia.

Meanwhile, MAHB says it is in the midst of planning a tender exercise to find a new retailer to take over Harrods’ 111 sq m space at KLIA. KLIA has 25,104 sq m of retail space while klia2 has 30,795 sq m. As at December last year, the former enjoyed 85% occupancy and the latter, 71%.

 

 

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