Co-op carve-up left Dairygold insulated from failure of DIY chain

WHEN Dairygold formed the 4Home DIY brand in 2006 it had an ambition to form a hardware empire which would see 30 stores based throughout the country.

With the latest three closures in north Co Cork and Co Limerick, there will be just seven of the distinctive outlets.

Yet while the business plan has obviously fallen victim to the rigours of the recession, the hierarchy in Dairygold must secretly be pleased with their own foresight.

The decision in late-2005 to divert its non-core business interests from its dairy and agricultural business meant Dairygold could be safe in the knowledge that any collapse in the peripheral operations would not impact on its core.

The company further insulated itself by convincing its 8,000 shareholders to take on individual responsibility for 75% of the shares in its non-core interests.

That meant that by mid-2006, it was happy to spin out Reox Holdings, which had three constituent parts called Breo Foods, Alchemy Properties and 4Home superstores, the DIY and retail outlets.

4Homes was formally established at the beginning of 2006 taking over the operation of a small number of Dairygold shops, mainly the largest stores.

For the next three years, it looked to expand for the first time outside Munster with stores in places like, Portlaoise, Carlow, Monaghan, and Ashbourne.

The stores were all strongly branded and senior management were confident they could build into a highly successful, innovative national brand.

However, just at the wrong time, the recession started to pull back on the economy and the relatively new stores, which had only a small penetration in their local communities, began to suffer hard.

Gradually the company began to close all those operations outside Munster.

Now the only offering outside Munster is a franchise in Gorey that is owned by another co-op.

The net effect of the rationalisation process is that 4Home has now shrunk to its original core in Munster. And with the closure of the three stores in Limerick, Fermoy and Mitchelstown, that core is even smaller.

Of the seven stores remaining, six have agricultural supplies as a large component, an area which, no matter how the recession hits, will continue to remain viable.