Saturday 10 December 2016

Debenhams was prepared to close five stores during rent row

Published 21/08/2016 | 02:30

Debenhams was prepared to draw the shutters
Debenhams was prepared to draw the shutters

British retailer Debenhams was prepared to close as many as five of its 11 outlets here unless it secured adequate rent reductions as part of a deal for its Irish arm to exit examinership.

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The Irish unit of the UK chain was placed in examinership in May amid spiralling losses as it blamed high rents and staff costs for its predicament.

The examinership also exposed a fractious relationship between Debenhams and the Roche family, which is among the retailer's landlords here, controlling two of its prime premises in Dublin and Cork.

The Roche family sold their eponymous department store chain to Debenhams in 2006 for €29m.

Debenhams group treasurer Mike Hazell had told the High Court in an affidavit that the retailer's Irish unit has paid the €94m on the two prime leases in Dublin and Cork to the Roche family since 2006, but also "substantial rent" on five other outlets that have now been sold by the Roches.

And while it had emerged during the examinership process that three outlets were at particular risk of being closed down, it's understood that Debenhams was prepared to pull down the shutters on as many as five stores unless it could secure the rent reductions it needed.

Kieran Wallace of KPMG was the examiner of the Irish arm of Debenhams. It will successfully exit the examinership process on Thursday.

Debenhams also saw off controversial British billionaire and Sports Direct founder Mike Ashley, who took a tilt at gaining control of the retailer's Irish operations under the examinership.

Debenhams' Irish division emerged as the preferred bidder, however.

Debenhams employs 1,400 people directly here, 500 of them full-time. Another 800 work at the stores at concessions and make-up counters.

It said on Friday that 98 of its workers will take voluntary redundancy .

Debenhams Retail (Ireland) had sales of €166m last year, but has lost €22.6m over the last three years. Its total annual rent roll is €25m, while staff costs amount to €36.6m a year.

Sunday Indo Business

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