B&Q and Pamela Scott rent release deals ‘likely to set precedent’

The successful emergence from examinership of DIY giant B&Q (Ireland) and ladies fashion retailer Pamela Scott after releasing themselves from prohibitive rent agreements is likely to set a precedent for other similar-sized chains, according to industry representative Retail Excellence Ireland.

B&Q and Pamela Scott rent release deals ‘likely to set precedent’

A significant number of high street retail chains — potentially as many as 10 — could be about to apply for examinership in a bid to release themselves from prohibitive rent agreements.

“The development is most interesting for international retailers with parent company guarantees, as precedent has now been set indicating that leases can be renegotiated even with a parent company guarantee in place,” noted REI chief executive David Fitzsimons.

“I understand that many other international retailers, trading in Ireland, will now investigate using the examinership process as a means of escaping penal upward-only rents,” he said.

B&Q emerged from examinership with 640 jobs and eight shops intact, having seen just one closure — Waterford last weekend and 47 job losses.

It had threatened a worst-case scenario of two-to-six shop closures, which could have seen over 200 jobs lost.

Its British parent, Kingfisher, is pumping more than €2.4m of fresh investment into the Irish operations and B&Q Ireland chairman Brian Mooney said the outcome gave the company “a sustainable future”. He said management felt “huge regret” over the closure of the Waterford store.

In the case of Pamela Scott, 137 jobs — across 12 stores — have been secured and the process has provided security for the future. Prior to entering examinership, all of the chain’s leases had upward-only rental clauses.

Following landlord negotiations — as part of the examinership process — around 65% of these clauses have been replaced with market rent leases, which can be negotiated both up and down.

The company has reduced its overheads by approximately 40%, through rent renegotiations, since 2007 and plans to open four-to-six new stores (as well as one in Athlone this month) before the end of this year, creating a combined 50 new jobs.

lThe receiver appointed to the Xtra-vision chain has announced the closure of nine shops in the country with the loss of up to 54 jobs.

Eight of the outlets are based in Dublin and the other store is in Roscrea. These were all considered to be unsustainable. The receiver is still looking to find a buyer for the remaining 130 stores in the group.

The receiver also announced 11 shops in Northern Ireland would be shut making 58 workers redundant.

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