Sasha to close five stores due to high rents

Retailing:Since the arrival of the likes of Zara, H&M and New Look, Sasha has struggled to hold its own against the opposition, says Gretchen Friemann.

Sasha, the Dublin-based women's fashion chain, is closing five of its best located stores as runaway rents and stiff market competition take their toll on the company.

The retailer has already sold the leasehold on its Henry Street shop for over €750,000 and is in the process of offloading four more high-rent outlets in St Stephen's Green, Blanchardstown, Liffey Valley and Mahon Point.

According to industry sources, Sasha will replace the bigger units with smaller outlets in less expensive locations and is apparently close to securing a deal for space in the Jervis centre.

In 2004 Sasha was bought for over €10 million by the Cork-based fashion accessories chain, Dynasty, in a deal that required both businesses to operate as separate entities.

In the last month Dynasty itself has become a takeover target after the brand's owner, Cyril Walsh, received an unsolicited offer for the company. Retail sources claim the bid was rejected and point out that any sale of Dynasty would not affect Sasha.

Despite rising rents and tough competition, a number of Irish-owned retailers have changed hands for large sums of money recently. In 2005, Lifestyle Sports sold its 71 stores for €59 million to Stafford Holdings while last year the PCP One Consortium acquired Champion Sports and its 17 stores for €60 million.

A-Wear is the latest business to be put on the block. Earlier this year luxury retailer Brown Thomas decided to sell the low-cost brand, which operates 27 stores across the country, as a going concern after soaring costs started to eat into profit margins.

A number of press reports identified the Icelandic Group, Baugur, as the front runner but it is now thought the chain will be bought out by a private equity group in a deal that has been rumoured to be worth up to €90 million.

Sasha is almost double the size of A-Wear with a network of 44 stores nationwide, however the brand has struggled to hold its own against the corporate clout of international heavyweights like Zara, H&M and New Look. Since their arrival and rapid expansion in Ireland, these well-known brands have generated handsome profits even though the rental payments on most of their stores are at the top end of the market.

It's this ability to pay over the odds for a foothold in key areas that has frustrated many indigenous players.

Two years ago an action group of Irish retailers, that included Dynasty and Sasha, mounted a campaign against the sharp spikes in rental levels, branding it the "biggest rip off of all" in a letter to the Minister for Enterprise Michéal Martin.

They blamed the willingness of foreign multiples to pay "stupid money" for prime locations as the reason why landlords were seeking two to threefold increases in the rent.

Last month the UK multiple, Jigsaw, agreed to sell its Grafton Street lease for €1.4 million to the British fashion house Ted Baker while Karen Millen paid the same figure to take over the Principles shop on the country's most expensive thoroughfare. Although Sasha is one of the largest Irish-owned chains, it is understood the company could no longer afford to carry the high rents at its five most prominent stores.

Retail sources also claim the company wanted to take advantage of the generous premiums it could achieve at some of the locations. The rent at the 465sq m (5,000sq ft) Henry Street store, which is owned by Irish Life, was comparatively low at around €200,000 per annum. But property experts point out the key money generated will be the highest of all the units.

A review is due on the Henry Street store later this year and the rent is expected to more than double to €500,000 per annum.

Sasha's St Stephen's Green store is among the most expensive of the five outlets with an annual rent of around €450,000 for 372sq m (4,000sq ft) of space.

While Sasha, which was founded in 1983 by Terry O'Brien, is part of a growing number of Irish retailers facing increasingly tough trading conditions, some indigenous fashion chains have grown to be as powerful as their foreign rivals.

Penneys is one of the most successful brands in the market and is expanding at a rapid pace throughout Ireland and the UK, where it trades as Primark.

Last month the opening of its new flagship store in London's Oxford Street sparked a stampede as shoppers raced to cash in on promised discounts.