Mothercare's Irish bottom line boosted by €2m examinership gain
The Irish arm of children's clothing and accessories retailer Mothercare made a €1m profit in the year to the end of last March - but only because it recognised a €2.2m exceptional gain realised as a result of its examinership in 2015.
Without it, it would have made a €1m loss. But the directors believe the Irish division will return to growth and profitability in the short to medium term.
Mothercare placed its Irish business in examinership in July 2015.
It cited high rents that it was paying, which exceeded market rents at the time, as a significant reason for its difficulties.
It emerged from the examinership process the following October. Almost 300 jobs were saved but three outlets were closed - two in Dublin and one in Limerick.
It now has 15 premises, including five in Dublin.
It secured significant rent reductions under the examinership process.
"The underlying business remains viable and strong," the directors note in accounts just filed for the business at the Companies Registration Office. They confirm that they expect the business to be profitable.
The Mothercare Ireland business operates as a franchise of Mothercare UK. It has traded in Ireland for about 25 years.
The accounts show that its turnover in the 12 months to March 2016 slipped to €31.6m from €33.2m a year earlier.
The company noted that it incurred "significant legal and professional costs" because of its examinership, but that it also secured writedowns on inter-company loans and discounts due to creditors and rental agreements. That resulted in the €2.2m exceptional gain it recorded in the financial year.
Just prior to Mothercare Ireland going into examinership, it owed €2m to Effleby Trust .
Effleby is a company owned by the Ward family, which controls the Mothercare franchise here.
As part of the examinership process, the balance owed to Effleby was written off in full. Effleby Trust also advanced Mothercare Ireland €750,000.
As a franchise, the Irish unit operates independently of its UK namesake.
The UK business suffered for some time as margins were hit, partly as a result of competition from rivals such as Primark.
Last month, the company said its third-quarter sales in the UK grew, boosted by online orders.
Its total sales in the UK for the 13 weeks to January 7 rose 0.6pc, while its online sales climbed 5.5pc. Sales at UK stores open over a year edged 1pc higher in the quarter.
Mothercare said that 40pc of all its UK sales are now generated online.