The second edition
A slimmed down version of the original Hughes & Hughes bookstore chain has opened
This week, just over three months after the Hughes & Hughes chain of bookshops went into receivership, a slimmed-down group re-opened for business. The return of Hughes & Hughes represents a remarkable comeback for its founder Derek Hughes.
When Ulster Bank appointed a receiver to Hughes & Hughes on February 26 it looked like the end of the road for what had been one of the great Irish retail success stories.
Over the previous 26 years Mr Hughes had transformed what had been his family's magazine and book distribution chain into the second-largest Irish-owned bookseller with 24 outlets, 225 staff and annual sales of €37m.
The firm that became Hughes & Hughes was originally a distribution company.
Founded in 1957 and owned by Hughes's father it held the Irish distribution rights to a number of publications.
When Derek Hughes first became involved in the running of the business in the mid-1980s it was on its knees. The company had lost one large customer while another significant customer had gone bust leaving it nursing a large bad debt.
An even bigger problem was that Hughes and his father were at odds over the future direction of the company. While his father wanted to continue in the distribution business, Derek Hughes was determined to move into retailing.
Eventually Hughes bought out his father.
The company opened its first retail outlet in a basement in O'Connell Street, in Dublin, in 1985. Growth in the early years was steady rather than spectacular. The fledgling bookseller opened a second outlet at Nutgrove Shopping Centre and also operated a concession in Arnotts for a period.
In 1987 it won its first concession to operate a bookshop at Dublin Airport. This airport business would eventually grow to encompass half a dozen outlets at Dublin Airport, two in the new terminal in Cork Airport, with concessions at Shannon, London City and Heathrow Airport's new Terminal Five.
It was in the mid-1990s that Mr Hughes' company made the breakthrough from being just another "wannabee" bookseller to national chain. In 1995 it opened what was to become its flagship store in Dublin's St Stephen's Green Shopping Centre. This was to become the first of many new Hughes & Hughes outlets.
Most of these were located in the greater Dublin area but at its peak the chain also had shops in Ennis, Co Clare, Dundalk, Co Louth, and Galway.
Hughes & Hughes wasn't your typical, old-fashioned bookstore. The upstart new chain wooed customers with special offers and other marketing gimmicks.
Its shops were spacious, airy and well-lit, a million miles from the traditional bookstore. As consumer spending soared during the Celtic Tiger years Hughes & Hughes typified the new breed of innovative Irish retailers.
Widely respected as one of the most talented Irish retailers of his generation, Derek Hughes showed that his retailing talent wasn't confined to bookselling when, identifying the growing demand for Continental-style cafes among the newly affluent Irish, he was one of the founders of the Insomnia cafe chain in 1997.
When the giant US coffeehouse chain Starbucks first entered the Irish market in 2005 it was widely predicted that it would wipe the floor with Insomnia and the other indigenous chains. Except that things didn't quite work out like that.
After an initial period of breakneck expansion, Starbucks was forced to pull in its horns, announcing the closure of five of its Irish stores last November.
Meanwhile, with what can only be described as perfect timing, Mr Hughes and his fellow shareholders sold Insomnia to Icelandic conglomerate Penninn for €12m with the new owners also assuming €4m of debt.
Unfortunately when it came to Hughes & Hughes, Mr Hughes' timing wasn't as good. In the mid-Noughties just when, with the benefit of hindsight, the chain should have been retrenching, it stepped up the pace of growth. Like many other Irish retailers, Mr Hughes seemed to think that the good times would last forever.
In 2005 it announced plans to double the number of its Irish stores with new outlets in Limerick, Sligo and Navan, Co Meath, Dun Laoghaire, Co Dublin, and Wexford. Several new Hughes & Hughes airport outlets were opened including two at the new Cork Airport terminal and one at Heathrow's new Terminal Five. Then in 2008 it took over the huge outlet at Dundrum Town Centre, in Dublin, which was to have been occupied by the giant US book retailer Borders.
Borders' ill-starred foray into the Irish market provided the first indication that all was not well in the book world. After announcing its plans with great fanfare it opened its first superstore at the Blanchardstown Retail Park in 2006. This was to be followed by a second store in Dundrum with more out-of-town bookstores set to follow.
It never happened. The Blanchardstown store never really got off the ground and closed last year, Dundrum was offloaded to Hughes & Hughes and Borders retreated from the Irish market, its tail firmly between its legs, last year.
Since the middle of the decade several factors came together to create the perfect storm for Hughes & Hughes.
As the economic recession began to bite, nervous consumers kept their hands in their pockets. The value of retail sales has fallen by over a fifth since late 2007. Books, a discretionary item rather than a necessity, are particularly vulnerable to any downturn in consumer spending.
At the same time the structure of the book market was changing. In recent years the supermarkets have taken to selling heavily discounted best-sellers while online retailers such as Amazon have also been winning custom from price-conscious bibliophiles. Super- markets and online booksellers now share at at least one-fifth of the Irish book market.
However, Hughes & Hughes' biggest problem was that it owned none of its stores and was tied into sky-high rents. This meant that, when consumer spending went over a cliff two years ago, the chain found itself still having to pay these rents while the money it was taking in at the tills had fallen drastically.
Matters were not helped by the fact that, even in the good times, Hughes & Hughes had never been very profitable with its profits of €500,000 for the year to March 2008 representing less than 1.5pc of its €37m turnover.
By late 2009 the word on the street was that Hughes & Hughes was in trouble. In a desperate effort to survive it sought to renegotiate its leases with its landlords.
The company's largest landlord was of course the Dublin Airport Authority.
With passenger numbers having fallen by 13pc last year and a further 7.5pc drop on the cards this year, something had to give.
Unfortunately for Hughes & Hughes, the DAA's hand was strengthened by the knowledge that Eason, Ireland's largest indigenous bookseller, was desperate to get into Dublin Airport. When the DAA refused to make significant concessions Ulster Bank put a receiver into Hughes & Hughes, which had debts of more than €15m, on February 26. Within a week Eason had taken over the Dublin and Cork airport outlets.
And now Lazarus-like Hughes & Hughes is back. This week five outlets re-opened under the Hughes & Hughes banner after a new company, Sivota, bought them from the receiver.
While the Hughes & Hughes name has survived, the chain is now a fraction of its former size and Derek Hughes is in the unaccustomed position of not being the majority shareholder, with Sivota being owned by Pierce Molony who also owns the Bus Stop chain of newsagents.
Only time will tell if these new arrangements cramp Derek Hughes's style.