Interim examiner appointed to Debenhams in Ireland

An interim examiner has been appointed by the High Court to the department store chain, Debenhams Retail (Ireland) Ltd, which operates 11 stores nationwide including two in Cork.

The move affects the jobs of 2,265 people. About 1,415 staff are directly employed, while 500 concession staff and 320 cosmetic staff also work in the stores.

The application was brought as a result of Debenhams Retail Ireland suffering consistent losses since the onset of the recession in 2007, and after the withdrawal of support on Wednesday this week of its UK parent company, Debenhams Retail plc, the court heard.

The recession “has been bad for Debenhams” and the losses suggest the recovery in the retail sector here is “somewhat exaggerated”, Rossa Fanning, counsel for Debenhams Retail Ireland Ltd, said.

While revenue has begun to stabilise in the last two years and show signs of growth, the total revenue in the financial year 2015 was €167m, 22% below the 2007 figure.

Debenhams Retail (Ireland) Ltd is considered to have a reasonable prospect of survival, in whole or part, once certain conditions are met including approval of a survival scheme which would involve reducing costs, including staff and rent costs, Mr Fanning said.

Concessionaires and staff will continue to be paid throughout the period of court protection and all vouchers, gift cards and loyalty points will be honoured, he stressed.

His client was conscious of the public controversy that arose following the sale of Clerys and the effects on the latter’s concessionaires and staff, and Debenhams Retail (Ireland) Ltd was anxious to assure staff, concessionaires, and customers it will be “business as usual” during this examinership.

Mr Justice Brian McGovern said he was satisfied to grant court protection and to appoint Kieran Wallace of KPMG as interim examiner. He also made directions for advertisement of the petition and returned the matter to May 25.

Earlier, Mr Fanning said the company operates 11 stores here — four in Dublin, two in Cork, and others in Galway, Limerick, Newbridge, Tralee, and Waterford.

It incurred losses in five of the last six years and is insolvent both on a balance sheet basis and on its ability to pay debts as they fall due, the company’s petition stated. It incurred losses of some €22.6m in the last three years and continues to be loss-making in the current financial year.

It recorded increases in revenues of 1% and 2% respectively in the financial years ending August 2014 and 2015, but also reported losses in both years due to its fixed cost base. Store rents and staff costs account respectively for 15% and 22% of revenue. Payroll costs were €36m annually and rent costs for the 11 stores were €25m annually.