B&Q hopes to save stores in examinership

An interim examiner has been appointed to B&Q Ireland’s nine home improvement stores, which employ almost 700.

B&Q hopes to save  stores in examinership

Two of the stores — Athlone and Waterford — are to be closed as part of cost-cutting proposals, with a consequent loss of jobs.

The company employs 690, made up of 190 full- time positions and 500 part-time jobs, in stores in Cork, Galway, Liffey Valley, Limerick, Naas, Swords, Tallaght, Athlone and Waterford.

The company believes seven stores could be viable if rents are substantially cut and other cost-cutting measures are implemented. It is paying €11.6m rent for the stores and has been advised that is about €5.8m above open market rents.

The company said all 690 employees would be paid and all pre-paid goods and services, including kitchens, bathrooms and bedrooms, and their installation, together with gift vouchers and credit notes would be honoured.

Suppliers would be paid for goods and services supplied during the process, Mr Justice Peter Kelly was told in the High Court.

The petition for examinership will come before the court again on Feb 12.

B&Q counsel, Rossa Fanning, BL, said the company was insolvent, with liabilities of more than €17m to its parent company, Kingfisher plc, but has no bank or revenue debts. Its turnover had fallen 24.2% from a peak €124m in 2009 to €94.2m in the financial year to end January 2012.

A loss of €20.5m was forecast for the year ended January 2013, including restructuring and loss-making provisions.

Kingfisher had written to the company earlier this week saying the business was not sustainable with its current cost base and that the levels of support required by the company were no longer feasible.

The parent company indicated it would be interested in making a fresh investment in a restructured business.

Kingfisher also indicated it would provide financial support to the Irish company if it was under court protection so as to enable it meet the cash flow projections in an independent accountant’s report.

The directors of B&Q — Brian Mooney, Ratoath, Co Meath, and Diarmuid Walsh, Carlingford, Co Louth — resolved the company could not continue to trade without the support of Kingfisher and decided to recommend to Kingfisher International Finance SA that a petition be filed for examinership.

Mr Justice Peter Kelly said he was satisfied to appoint Declan McDonald of PWC as interim examiner and to grant court protection on the basis of evidence, including the opinion of an independent accountant the company has a reasonable prospect of survival in whole or in part, once certain conditions are met. A key condition was achieving reductions in the company’s rent roll, he noted.

The petition for examinership told “a depressingly familiar tale” of a company “throttled” by two elements — a decline of 32% in revenues over the past four years due to the general economic malaise, plus “totally uneconomic rents” to be paid under leases providing for upward only review entered into in better times of economic prosperity which proved to be a “mirage”.

The court heard B&Q came to Ireland in 2002 and expanded its number of stores during the economic boom, but has not expanded since 2008.

Retail Excellence Ireland said the rigorous enforcement of Celtic tiger rents by landlords was an untenable strategy and would force many more retailers over the edge.

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