Friday 24 March 2017

Future looks brighter as A-Wear is sold again

New owners vow to retain all 450 jobs across 37 outlets here

John Mulligan

John Mulligan

The A-Wear fashion chain has been sold for the second time in four months, with the new owners vowing to retain all 450 jobs.



The business has been sold by the British arm of restructuring specialist Hilco to the Luxembourg-based Jesta Group for an undisclosed sum. The Jesta Group is headed by Englishman Michael Flacks, who lives in Monaco.

Hilco Capital Ireland acquired the struggling A-Wear business last October as the chain teetered on the brink of collapse.

Since then, Hilco has undertaken some significant restructuring of the Irish business and provided €3m in additional working capital to the chain.

That included €600,000 that was paid in the last week to ensure staff wages could be paid. A-Wear has 37 outlets in Ireland. Its UK stores have been closed.

Speaking to the Irish Independent last night, Hilco Europe chief executive Paul McGowan said that A-Wear is now in "bloody good shape".

He said that Hilco had made "a few quid" from the deal to sell to Jesta. "We've done okay, but it's not our job to run retail businesses," he added.

Jesta is acquiring A-Wear on a debt-free basis.

The A-Wear chain had been bought by its management for €70m from Brown Thomas in 2007 in a deal backed by venture capital firm Alchemy Partners and funded by Ulster Bank.

Management, including managing director Annmarie Flood, held a 20pc stake. The business soon encountered difficulties as the downturn, coupled with high rents and a large debt burden, made the business unsustainable.

Mr McGowan heavily criticised the rental levels in Ireland and said the market here could see the "wholesale departure" of international retailers.

Extortionate

"Rental levels are simply extortionate for the new retail reality," he said. "Landlords are either unable or unwilling in many cases to implement reductions that would preserve a diverse retail environment in the Irish market."

He claimed that a number of international retailers were now reviewing their exposure to the Irish market.

"Although we have found landlords, including NAMA-borrowers, to be extremely helpful to A-Wear as an indigenous retail chain, I fear that the recent pronouncements from NAMA and the Department of Finance do not go far enough to prevent a wholesale departure of quality, international retail from the Irish market."

However, he said he was grateful to NAMA and the Revenue Commissioners for what he said was their acceptance of Hilco's "progressive approach" to the serious financial difficulties the restructuring group inherited at A-Wear.

Larry Howard, the chief executive of Hilco's Irish operations and former finance director with Dunnes Stores, said Jesta had the capital and expertise to drive the business forward in the Irish and international markets "without the burden of unsustainable debts and excessive central overheads". He added that A-Wear could now "fight to live another day".

A-Wear chief executive Mark Naughton-Rumbo said that he was pleased to see the firm emerge from a "very challenging stage" in its development.

Irish Independent

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