Upward-only rent blamed for threat to Homebase jobs
THE policy of upward-only rent review is being blamed for killing retail businesses across the country.
Garden and home appliances chain Homebase has become the latest in a long list of retailers to reveal how the policy is crippling its ability to do business.
Almost100 full-time and part-time jobs are at risk at three of the retailers stores. The company employs some 558 people across the country.
Rossa Fanning, counsel for Homebase, said in the High Court yesterday that its current yearly rent bill of €10.3m was around 50pc greater than "open market rent".
The company entered court examinership yesterday. Its turnover for the year to end March 2006 was some €67.6m but that fell to some €46.3m for the year to end March 2013.
Homebase has begun discussions on the closure of three of its 15 stores including one in Fonthill, Dublin, one in Carlow and one in Castlebar, Co Mayo.
A total of 17 full-time and 79 part-time staff are employed at those three stores.
A spokesperson said any workers who were made redundant would have the option to transfer to Argos, which is also owned by the Home Retail Group.
Trade body Retail Excellence Ireland (REI) has warned that is aware of a number of other retail operators that will enter court protection in the coming weeks.
REI chief, David Fitzsimons, said the Homebase case was a "clear and unequivocal indication" that upward only rents were placing huge pressure on "otherwise sustainable" retail businesses.
"Unless retailers can revert to 'close to market rent' our industry will continue to suffer from a disproportional level of business failure," he added.
Many retailers are trapped in contracts of up to 35 years, signed during the boom, containing upward-only rental clauses.
In January, well-known Dublin shoe shop Korky's on Grafton Street shut its doors with the loss of eight jobs.
Owner John Corcoran had fought a public battle against upward-only rent reviews.
In December last year, Bewley's chief executive John Cahill blamed its loss of €700,000 on a turnover of €6m in 2011 on a "grossly excessive rent" of €1.5m a year.
Earlier this year the iconic cafe, also based on Grafton Street, won a landmark court victory challenging the upward-only rent clause in its lease.