Eason chief hopes the next chapter at iconic store will have a happy ending
Adapting the 127-year-old grand dame of booksellers to the world of modern retailing is a big challenge, admits Conor Whelan
“One can’t deny that things are improving, but I see at least another 18 months before we see a sustained level of growth in retail.” Conor Whelan at Eason’s flagship store on O’Connell Street, Dublin. Photograph: Eric Luke
On a side table of an office on the top floor of Eason & Son, the 127-year-old grand dame of Irish books-to-stationery retailing, is a collection of remnants from a glorious past.
Conor Whelan, the chief executive of Eason, who is tasked with ensuring the company survives into the future, picks up each artefact in turn to explain it.
“One of the first things I wanted to do after I was appointed was to protect all these documents by bringing an archivist in from UCD to protect them,” he recalls.
Gingerly, the accountant holds a pamphlet written by trade union leader Jim Larkin warning the company not to stock the newspapers of William Martin Murphy in the thick of the 1913 lockout of workers.
Another letter is from Charles Eason in 1886 to British retailer WH Smith, inquiring whether he could buy out the company. “We like to think that it was Ireland’s first management buyout,” Whelan remarks.
There are notes too from the Eason family recollecting the start of the Easter Rising in 1916 and a richly-illustrated book which was presented to Charles Eason II in 1925 to mark his 50th year in the firm.
It is hard not to be impressed by the history of the Eason brand. Like nearby iconic retailers Clerys and Arnotts, it is part of the fabric of Dublin city centre. Unlike Clerys and Arnotts, however, Eason has survived the financial crisis under the same owners. That is not to say that nothing has changed.
Whelan was appointed as managing director of Eason in September 2009 at one of its lowest points. The previous January it had breached its loan covenants, and it went on to lose €10 million in its financial year to January 2010.
“This business was in serious need of restructuring when I took over,” Whelan recalls. “We had to work out how to sustain it and transform it in terms of succeeding into the future.”
“Eason was Irish. It was iconic and of significant scale to interest me. I liked the challenge of the turnaround.”
The extent of the economic downturn, took him by surprise. “I don’t think anybody recognised the size of the challenge.”
Whelan faced problems both specific to Eason such as a need to modernise and poor overseas investments. Then there were the bigger trends: pressure from online competitors like Amazon; flog-books-cheap merchants like Tesco; and the general Irish economic malaise. “It was a bit of a double whammy,” he admits.
Whelan has an array of bullet points outlining what has happened to Eason since he took over in 2009.
First, he talks through Eason’s latest annual results. Eason Group, which incorporates 65 own and franchise stores, an online arm and a wholesale business, had, he says, made a net profit of €2.3 million to January 2014, versus €2.6 million the previous year.
There was an operating loss of €200,000 because of a €2.2 million depreciation charge following capital investments in stores and technology. Revenues were down 7.1 per cent to €227.4 million.
The group’s core retail market was, he says, down 5.6 per cent, with revenues from franchises down 8 per cent. The group’s wholesale business declined sharply by 18 per cent.
Eason’s balance sheet remains strong, with shareholder funds rising by €4.3 million to €70.6 million, and net debt standing at just €1.1 million.
“2013 was extremely difficult for the retail trade in the Republic of Ireland,” Whelan says. “We obviously have continued consumer depression because of the ongoing austerity and property tax, etc.”
A lack of new bestsellers such as the Hunger Games series had combined with a hot summer in 2013 to make things worse.
No dividend, Whelan says, was being paid to its 235 shareholders, made up of five families and staff, as a result of the continued downward trend in trading.
After modest dividends the previous two years, it was back to a freeze, first introduced after 2008.
“I don’t think shareholders will be terribly surprised,” Whelan says. “They won’t be happy but . . . We are just coming out of the restructuring phase and hopefully into the sustainability arena. In light of the cost of restructuring [a dividend] wouldn’t be appropriate.”
Eason is leaner since Whelan first arrived. He has disposed of troubled businesses in South Africa and the UK, and closed five loss-making stores in Ireland.
Franchise numbers have almost doubled since 2010, however, to 29 outlets.
A big change Whelan identifies is a €12.5 million investment in IT systems. It was “very poor” before, he says, “but now I can see what is going on”.
The system, he admits, was not in its 29 franchise stores, leading to “less visibility”.
The next big change, he says, was attacking Eason’s “unsustainable” cost base.