Wednesday 22 November 2017

Court row overshadows question of whether chain even has a future


John Mulligan

John Mulligan

As Superquinn director Kieran Ryan took to the stand in a packed Court 14 on Tuesday morning, the half-century-old retail group's future essentially succumbed to legal argument of the Punch and Judy variety.

The questioning in Dublin's High Court sought to demystify events in the days prior to receivers being appointed to the group. The result can be boiled down to a to-and-fro that went something along the lines of: 'Oh yes he did' and 'Oh no he didn't'.

Mr Ryan, who owns about 10pc of the chain, and another Superquinn director, David Courtney, who owns 14.5pc, wanted leave to seek to have an examiner appointed to the group and have the receivership set aside. They claimed the business would be better off in such a scenario. Yesterday, they withdrew their attempt to have an examiner appointed.

The Superquinn saga has once again brought into sharp relief the post-apocalyptic landscape of Ireland's nuked commercial and domestic property sector. The takeover of the group back in 2005 by property speculators is just one of dozens of deals that will become footnotes to the country's economic crisis.

But the battle among directors, shareholders, receivers, banks and the proposed Superquinn buyer this time around -- Musgrave -- has overshadowed the question of whether Superquinn itself actually has a future, no matter who owns it.

Away from the battlefield, news this week that Superquinn's share of the grocery market has fallen below 6pc for the first time in its long history served to underscore the difficult position the chain finds itself in as it is squeezed by better-performing and better-capitalised rivals.

With annual sales of around €500m (a low not seen at the group since the early part of the last decade), Superquinn now ranks as Paddy Last in the trade.

It is never going to be a Tesco or a Dunnes -- but now Superquinn is even smaller than Lidl and Aldi. It has suffered a tumultuous fall from its heyday when Michael Jackson and Whitney Houston ruled radio playlists and cinemas were showing 'Rain Man' and 'Schindler's List'.

Anecdotally, shoppers moan about the quality of some Superquinn stores, many of which have suffered from underinvestment, and also about what they perceive to be the slow erosion of the chain's once-fabled customer service.

Musgrave, which controls the SuperValu and Centra brands here, plans to pay between €200m and €250m for Superquinn and says it will invest around €20m developing the business.


While Musgrave chief executive Chris Martin has said he doesn't intend to close any stores, those in Portlaoise and Carlow are just two in the portfolio that insiders say have little future.

It's difficult to see how Mr Martin will be able to justify keeping stubbornly underperforming stores open. It's not just that the outlets might be doing badly -- they're in the wrong locations for Superquinn's more niche offering.

Observers say that some of Superquinn's worst-performing outlets are likely to be generating turnover in the region of just €10 per square foot -- half the average.

One can argue that at least Musgrave has a good track record -- it solidified the Budgens business in the UK that it wholly acquired in 2002. An acquisition of Superquinn would make it a close rival to Tesco as the biggest grocery operator in Ireland.

It's more difficult to see precisely how Kieran Ryan and David Courtney would have revitalised the business, even if they had managed to bring on board a proposed Baltic trade investor.

Not only would they have faced the same issues Musgrave will, they'd also have had to resolve the tense relationship with Superquinn's bankers. There was also the issue of the complicated property structures attached to many Superquinn outlets.

Musgrave, on the other hand, plans to buy Superquinn's trading business and won't be burdened by property liabilities.

Court 14 told one story this week though -- the lawyers won again.

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