Dunnes Stores looks to next generation in face of big challenges
Published 29/07/2010 | 05:00
Ireland's largest family-owned retail group was the focus of intense speculation last year with repeated rumours it was about to be acquired by Asda, which is owned by US giant Wal-Mart.
It wasn't the first time the group had been a mooted takeover target and probably won't be the last.
The Dunne family's matriarch, Margaret Heffernan, finally quashed the speculation last September at the opening of a revamped outlet in Cork.
"Our aim is to keep it as a family-run company and I am confident the next generation will be able to do that with the support, dedication and loyalty of a fantastic workforce," she told employees.
Dunnes Stores is nevertheless facing significant challenges.
Among the shareholders in the retailer, besides Ms Heffernan and Frank Dunne, is solicitor Sharon McMahon, who along with her three siblings inherited a stake in the business from their mother, Elizabeth, a daughter of Ben Dunne Snr.
Sharon works for the retailer. As one industry insider said: "There's no sh**e about her. She's focused and has a bit of vision."
Michael Heffernan, Margaret's son, recently upped sticks from the company. He was head of textiles, but is believed to have had disagreements with his mother regarding his role.
Also involved in the business is Margaret's daughter Anne, who is a doctor. She is divorced and now in a relationship with Iain Slater, whose design company has produced packaging for Dunnes.
As with Tesco, the Irish retailer was being hammered by cross-border shopping last year as people flocked over the border to towns such as Newry to capitalise on sterling's weakness.
An unlimited company, it's not clear exactly how much profit Dunnes makes, but its turnover is likely to be around the €2bn mark. On a 9pc profit margin, which is estimated to be what rival Tesco operates on here, that would equate to a profit of about €180m, but the real figure is almost certainly less.
Tesco's logistics and distribution machine is extremely advanced compared with Dunnes, and the British retailer's buying clout enables it to wield additional pressure. Tesco, the world's fourth-biggest retailer, has bypassed many Irish suppliers, sourcing directly from Britain.
Dunnes, on the other hand, is a veritable retail dinosaur compared with Tesco and having had to compete harder than ever during the past two years, it's likely its profit margin has come under pressure.
With no centralised distribution, its delivery and store ordering process is acknowledged by industry insiders to be well behind industry norms. Meanwhile, it lost its most senior non-family director after Margaret Heffernan and Frank Dunne last year when Andrew Street left after originally joining from Boots in 1998.