Debenhams posts profit of €19m after examinership

The Irish arm of UK retailer Debenhams posted an after-tax profit of €19.2m last year following a successful examinership when a large amount of debt was written off.

That is according to new accounts just filed by Debenhams Retail (Ireland) Ltd which show the business recorded a pre-tax profit of €19.6m. That compares with the pre-tax loss of €5.8m in the previous year.

A note attached to the accounts shows that it had an exceptional gain after debts of €16.6m owed to a connected firm were written off. Derivatives comprising forward foreign currency contracts were also written down to zero.

Revenues increased by 8.5% from €166.5m to €180m in the period of 53 weeks to early September. The directors state the firm entered examinership last year with the objective of restructuring its operations to create a competitive and sustainable business for the future following several years of losses. According to the directors’ report, “the external economic and commercial environment is expected to remain uncertain and volatile in 2017”.

They add: “However, the successful restructuring and exit from examinership has positioned the company well for a successful future and it has begun to implement investment plans to deliver growth going forward.”

The retailer had charges of €4.4m that included the costs of redundancies within stores and dilapidation costs.

The company operates 11 department stores in the Republic, the majority of which it acquired from Roches Stores in 2006.

The firm operates stores in Dublin and in Cork, as well as in Limerick, Tralee and Waterford.

A breakdown of sales shows that the percentage share of online sales rose from 8% to 11%, with the share of store sales declining by the corresponding drop of three percentage points to 89%.

Staff employed by the firm last year fell by 127 to 1,508, with employee costs falling slightly to €33.3m.

The firm’s spend on operating lease rentals last year fell from €25.36m to €25.3m.

Shareholder funds totalled €23m, compared with shareholders’ deficit of €7.3m a year earlier.

A note attached to the accounts states “after reviewing current performance and detailed forecasts, taking into account available bank facilities and making further enquiries as considered appropriate, the directors are satisfied that the company has reasonable resources to enable it to continue for the foreseeable future”.

The company’s tangible assets last year had a book value of almost €22.4m.