Business Irish

Thursday 26 April 2018

Debenhams paid €100m rent to Roche family

British retailer and landlords trade barbs as chain's Irish arm enters examinership

The Debenhams store on Dublin’s Henry Street. Photo: Damien Eagers
The Debenhams store on Dublin’s Henry Street. Photo: Damien Eagers
Roches Stores was sold off to Debenhams in 2006
John Mulligan

John Mulligan

Debenhams has paid more than €100m in rent to the Roche family over the past decade, documents filed with the High Court reveal.

And nearly €94m of that has been paid in respect of leases on just two outlets - the Debenhams stores on Dublin's Henry Street and Cork's Patrick Street.

It can also be revealed that the Roche family firm that receives the rent paid by Debenhams has itself had to re-engineer its own finances.

Accounts for that firm, Dooroy, show it had a shareholders' deficit of €48m at the end of 2014 - the most recent year for which publicly available accounts have been lodged with the Companies Office.

It had borrowings of €164.7m with Bank of Ireland at the end of 2014 and the loans are secured by the Henry Street and Patrick Street properties, as well as other assets.

In 2014, Dooroy negotiated a revised facility with the bank, which expires in June 2017.

The Irish arm of Debenhams has been placed in examinership, blaming high rents and staff costs here for continuing losses. The retailer is hoping that the examinership process will allow it to secure rent and other cost reductions that will make its business here viable.

The Henry Street and Patrick Street stores have upward-only rent-review clauses.

In an increasingly acrimonious battle between Debenhams and the Roche family - who sold their Roches Stores business to the British chain in 2006 for €29m - the pair have traded barbs and accused each other of misrepresenting facts.

Debenhams group treasurer Mike Hazell told the High Court in an affidavit that the retailer's Irish unit had paid the €94m on the two prime leases to the Roche family since 2006, but also "substantial rent" on five other outlets that have now been sold by the Roches.

Mr Hazell also insisted that agents for Debenhams did engage with the Roche family regarding a possible reconfiguration of the Henry Street store and strongly rejected claims by Richard Roche that the retailer had shown no interest in progressing talks.

"The proposals were reviewed at length by the company (including a senior management presentation to the company and other group entities)," he said in his affidavit, adding: "It concluded that the proposals were not commercially viable and not in the best interests of the company."

Mr Hazell also said he rejected entirely "the inappropriate" claim by Mr Roche to the effect that Debenhams had been merely biding its time on the 'deployment' of examinership.

He also dismissed claims that part of the Henry Street store in Dublin that has been sub-let by Debenhams to Spanish fashion giant Zara was generating significantly more rent per square foot than what Debenhams was paying on the rest of the premises to the Roche family.

Mr Roche claimed that the rent being paid by Zara to Debenhams "goes a long way towards funding the rent paid by Debenhams on Henry Street" and that Zara was paying a "substantial turnover-based occupation charge".

Mr Hazell said it was "inaccurate" to say that Zara was paying more per square foot than Debenhams was paying.

Debenhams, whose Irish unit trades from 11 outlets, employs 1,400 people directly here, 500 of them full-time. Another 800 work at the stores at concessions and make-up counters.

Debenhams Retail (Ireland) had sales of €166m last year, but has lost €22.6m over the last three years. Its total annual rent roll is €25m, while staff costs amount to €36.6m a year.

The retailer claims that the two costs have placed a strain on the business.

Mr Roche - who has not objected to the examinership per se - claimed that no evidence has been presented by Debenhams that its rents here exceed market rates.

But Mr Hazell said Debenhams had engaged retail expert Michael Harrington, who had advised the Irish division of the retailer that it was paying rent that "substantially exceeds" the market rate.

The Roches indicated that their Dooroy firm remained open to renewing rent negotiations.

Irish Independent

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