Arnotts ‘back on a sound footing’

THE new management team at Dublin retailer Arnotts has said that the business is back on a sound footing, with its latest financial year set to show a return to sales growth.

Such a result would follow a year when the department store operator came under the control of its main lenders and incurred after-tax losses of just over €295 million.

Financial statements, just filed with the Companies Office, show that Arnotts’ operating losses — during the 12 months to the end of January 2010 — increased by €1.1m to €9.2m, after-tax losses amounted to €295.1m, and group turnover fell by 25% to €120.7m.

Arnotts came under the joint ownership of Anglo Irish Bank and Ulster Bank last August, with the two institutions owed a combined €260m, mainly relating to the retailer’s now-shelved Northern Quarter development project for Dublin’s north inner city. Arnotts’ 2009/10 earnings were reduced by €268.2m due to non-cash real estate re-valuations and non-operating losses.

As well as putting in place a new management team, the banks provided €10m in working capital for the company and deferred the need for immediate repayment of the outstanding debt. Trading results for the 2010/11 period — the 12 months to the end of this month — are expected to show significant growth, including single digit percentage turnover growth and an increase in earnings. Cost reductions and strategic initiatives have already resulted in improved margins.

Arnotts’ management is now saying that after being in a “perilous state”, the business has been “stabilised and secured”.

“Our strong performance in 2010 is evidence that we have weathered the adverse consequences of a deteriorating economy and have positioned ourselves to grow and gain market share as the Irish economy improves,” added chief executive Nigel Blow.