Quango blamed for bookstore chain's closure
Bank wanted to keep Hughes & Hughes afloat
Published 07/03/2010 | 05:00
Another major row is brewing at Dublin Airport over the collapse of talks between the Dublin Airport Authority (DAA) and Hughes & Hughes bookshops last week. Inside sources at the bookstores are blaming the DAA for the closure of the chain.
Ulster Bank was prepared to continue to support the nationwide business if the DAA had made concessions on rent. After the DAA refused to lower its charges, the company -- which has been trading in Dublin Airport for 23 years -- went into receivership.
According to advisers close to the deal, Hughes & Hughes had been in discussions with the DAA for six months. Last Tuesday, the receiver -- David Carson of Deloitte -- was contacted by the DAA and told that the Eason book chain would take over the Hughes & Hughes airport outlets which, according to the DAA, are profitable.
According to insiders, Hughes & Hughes argued that rent and charges on their shops at Dublin Airport should be reduced in line with the fall in passenger numbers from 24 million to 18 million last year. They also feared that about 40 per cent of the 18 million passengers would be lost to the new T2 terminal.
Hughes & Hughes has also seen their rates at Dublin Airport alone rocket from €220,000 to €500,000 this year. According to the book trade, Hughes & Hughes has been caught in the "perfect storm" of a huge rent roll and a drop in demand.
The DAA would not confirm that the book chain was about €1m behind in rent.
The company, which is the biggest concessionaire at Dublin Airport, paid a "minimum annual guarantee" on the seven bookshops, topped up by a percentage of turnover. According to a DAA spokesman: "Hughes & Hughes did not pay the DAA a fixed rent but instead paid a concession fee that was directly linked to turnover.
"As part of its licence with the DAA, Hughes & Hughes agreed that this concession fee would not fall below a certain annual minimum level.
"This combination of a concession fee and a minimum payment is typical of all retail concessions at DAA airports and offers a risk-sharing system between the DAA and its retail concessionaires. Based on its sales at the Dublin Airport stores, Hughes & Hughes had always exceeded the required minimum payment due under its licence."
He also said that the DAA was "extremely flexible in its dealings with Hughes & Hughes in recent months" and offered the bookseller "significant assistance in trying to overcome the difficulties that it was experiencing in its non-airport business".
"All the stores in the chain -- bar one -- were trading profitably, but there were charges against them and in the present climate these were not sustainable without a deal at Dublin Airport," according to a retail analyst close to the failed negotiations.
Although Hughes & Hughes had a turnover of over €70m, it made an overall profit of less than €500,000 in 2008. Derek Hughes, who inherited the family book chain, has declined to comment since the chain went into receivership on February 26. Mr Hughes, who had the support of his bankers and staff, was bitterly disappointed.
The collapse of the book chain comes as another unwelcome blow for the DAA after a bruising encounter with Michael O'Leary of Ryanair over Hangar 6 and the subsequent row over 500 maintenance jobs that O'Leary said he could have created at the airport.