Examiner appointed to Atlantic Homecare
Grafton Group's Atlantic Homecare unit racked up losses of about €3m in the first four months of this year, the Irish Independent understands.
Details of the losses come as the division -- which operates four Atlantic Homecare outlets and nine Woodie's DIY stores -- had an interim examiner appointed to it in court yesterday.
Some of the stores in the Atlantic Homecare stable are paying rents at rates that are up to twice as much as is being currently charged on the open market, exacerbating trading difficulties.
It's virtually certain that five of the 13 outlets in the division will close under the examinership process. That will result in the loss of 38 full-time jobs and 76 temporary positions.
Those five outlets -- in Dublin, Cork, Kildare, Limerick and Galway -- were expected to generate combined losses of €3m this year if they continued in operation.
Atlantic Homecare employs a total of 348 people.
Grafton Group has a further 27 Woodie's DIY stores in Ireland that aren't affected by the examinership process. Atlantic Homecare was acquired by Grafton in 2005 as part of its purchase of the Heiton group. There were 16 Atlantic Homecare outlets at the time.
The Atlantic Homecare division has been in the red every year since 2007 and since then has recorded accumulated losses of €21m, while turnover fell by 44pc between 2007 and last year to €56m.
Total sales at all Woodie's and Atlantic Homecare outlets fell 16pc year-on-year in the first four months of this year.
Grafton conceded earlier this year that some of its DIY stores would never turn a profit.
The company said yesterday that while its overall DIY business is still profitable, its performance has been "held back" by the Atlantic Homecare arm.
"These losses are no longer sustainable and a restructuring of Atlantic via the examinership is intended to bring these to an end while maximising the potential for the business to survive," the company said.
Accountancy firm KPMG has prepared a report for Atlantic that the DIY firm says shows there is a "good prospect" of Atlantic becoming a sustainable business "if an extensive restructuring process can be undertaken".
Grafton, which generates about 75pc of its annual €2bn in sales in the UK, has already supported investments and restructuring at Atlantic that were aimed at stemming its losses. However, it's thought that the company was hopeful that a promised abolition of upward rent reviews would be implemented by the Government. That never materialised.
The examinership process will give Atlantic the possibility of extricating itself from onerous leases subject to agreement from landlords.
Declan McDonald of PricewaterhouseCoopers is expected to be confirmed as examiner following a court hearing next week.
Last year, Xtravision secured some substantial rent reductions on its 140 outlets after it entered an examinership process.