DIY specialist Homebase has become the latest retailer to place its Irish arm into examinership after poor trading in the country.
Homebase is proposing closing three of its 15 stores in the country “to put the business on a sustainable footing”.
The retailer said it has suffered a 31% sales fall since 2009 and it has been unprofitable for each of the past five years “despite significant remedial action being taken by management”.
The tough economic conditions, reduction in new house builds and lower consumer spending has hit the retailer hard, said Homebase.
“In addition, Homebase Ireland’s ability to reduce operating costs has been restricted by the existence of “upward only” rent reviews on its store leases. This is a situation that can no longer be sustained,” Homebase added.
The High Court in Dublin has appointed KPMG as interim examiner, providing protection for Homebase Ireland.
The DIY retailer follows its rival B&Q, which placed its Irish business into examinership earlier this year, and fashion retailer Monsoon, which sought the appointment of an Examiner in March. Both retailers have since emerged from the process, saving the rump of each business in both cases.
The three stores that have been slated for closure are located in Fonthill, Carlow and Castlebar and employ 17 full time staff and 79 part time employees. A spokesman for Homebase parent Home Retail said the retailer would aim to redeploy staff into local Argos stores. The three Homebase shops represent less than 1% of the retailer’s property portfolio, he aded.
Homebase said “the future viability of the remaining 12 stores will depend on a number of factors including securing the agreement of individual landlords of improved lease terms”.
Homebase Ireland chairman Robert Burke said: “The significant deterioration in consumer spending over the last five years coupled with high rents at each of our stores has made restructuring an imperative in order to re-establish a sustainable business, to secure the future of as many stores as possible and to protect as many jobs as possible. Today’s appointment represents an important step in this process.
“Customers can be reassured that the business will trade as normal during the examinership and all ordered products, pre-payments, credit notes and vouchers will be fully honoured.”
Retail Excellence Ireland chief executive David Fitzsimons said: “Today’s news is a clear and unequivocal indication that penal upward only rents are placing huge pressure on otherwise sustainable retail businesses.
“Commercial rents in Ireland increased by 240% between 2000 and 2007, a period when consumer prices increased by 30%. Unless retailers can revert to “close to market rent” our industry will continue to suffer from a disproportional level of business failure.”