Struggling Clerys seeking new funds on sales slump
Retailer warns its future is increasingly uncertain as losses at iconic store continue to mount
Published 16/12/2011 | 05:00
IT survived the aftermath of the Famine, the devastation of the Easter Rising, the Irish Civil War and two world wars. Now Clerys, arguably the country's most iconic department store, is again fighting a battle on Dublin's O'Connell Street.
The retailer has warned that if consumer spending remains depressed, it's facing mounting challenges. Sales at the business have slumped and the company is continuing to rack up losses.
The impact of Ireland's four-year economic whirlwind is starkly laid bare in new accounts just filed for Clery & Co.
Overall gross sales at the group, including those from in-store concessions, fell 8.5pc to €46.9m in the year to the end of last January. Excluding concession sales, Clerys's own net sales collapsed 19pc to €17.4m.
The group's overall loss for the financial year widened to just over €2m from €1.87m a year earlier, with the retailer's gross profit of €10.9m obliterated by overheads and loan interest repayments.
Clerys, which was one of the world's first purpose-built department stores when it opened in 1853, also operates home furnishing stores in Leopardstown and Blanchardstown in Dublin, and in Naas, Co Kildare.
The company has been controlled by the Guiney family for the past 70 years. Denis Guiney bought it out of receivership in 1941.
Clerys borrowed heavily during the boom to undertake a major €25m upgrade of the O'Connell Street store.
But it now has €20m in loans that fall due next February and is reliant on the forbearance of Bank of Ireland for its continued survival. The retailer has also been trying to secure alternative investment.
Chief executive PJ Timmins was unavailable for comment yesterday.
A statement issued by the group said that it required "significant capital input" to redevelop its property portfolio and it had been exploring a "range of options" to secure that finance.
The statement also said that Clerys expected the operating environment to remain challenging in the medium term, but that a number of well-known brands were still seeking to open concessions in the store.
"The directors recognise that the group depends on the continuing willingness and ability of the bank to finance its operations," Clerys's directors noted.
They warned: "Continuation of the support of the group's bank and the possibility of more prolonged declines in consumer demand beyond that assumed in the group's forecasts constitute material uncertainties that may cast doubt upon the group's and the company's ability to continue as a going concern."
Clerys has already cut working hours for its more than 200 directly employed staff by 15pc to reflect the poor trading environment. Operating expenses were cut by 13.3pc, or €1.87m, last year.