Debenhams’ Irish pre-tax profits slump to €6m

A CHALLENGING year for Debenhams Retail (Ireland) saw its pre-tax profits plunge from €16.7 million to almost €6m last year.

The company said a restructuring programme of its Irish operations it announced in January will cost it up to €11.3m.

It said this restructuring of the business in Ireland will “ensure that the business has the flexible and right-sized workforce that it needs for the future”.

Debenhams, which entered the Irish market by acquiring Roches Stores in 2006, moved to cut around 170 jobs in its Irish division through a voluntary redundancy scheme earlier this year.

Turnover in the year to the end of August 2009 was €188.2m, from almost €209m in the previous year. Gross profit fell from €27.6m to €12.7m.

The directors do not recommend the payment of a dividend.

The accounts read: “The external commercial environment for Debenhams Retail (Ireland) LTd is expected to remain challenging in 2010.”

Staff costs in the year remained much the same at around €41m despite the number of employees falling from 1,892 to 1,826.

The accounts said that in October last year the company received a capital contribution in the form of a loan note, of €46,500,000 from Debenhams Retail Holdings (Ireland) Limited. It said this capital contribution was used to repay the company’s balance due to Debenhams Retail plc, a 100% fellow subsidiary of Debenhams plc, the company’s ultimate parent company.

The British department store operator has 10 stores in the Republic.

On a group level it recently reported a profit of £123.6m (€139.78m) before tax and exceptional items for the six-month period up to the end of February.

This figure was up by 18.6%, on a year-on-year basis. Like-for-like sales were up by just 0.3%, hampered by poor weather conditions in the early part of this year across both Britain and Ireland.

However, the company has consistently seen sales growth over the course of the economic downturn and expressed its satisfaction with the results.

“We made further progress in delivering our strategy in the first half and are pleased with our performance,” said group chief executive Rob Templeman.

Mr Templeman added that management expects the trading environment for the company to be “broadly neutral” during the second half of the financial year.

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