Irish-owned books and stationery retailer Eason has shelved a plan to sell its flagship O’Connell Street store due to a softness in the commercial property market.
Eason chairman David Dilger told shareholders of the decision at the company’s annual general meeting on Tuesday, adding that it would save the retail business about €900,000 in rent and licence income.
This news came as shareholders received a €15 million payout from the sale of other properties by the company.
This brought to €50.7 million the amount paid out to Eason shareholders from the disposal of 11 properties since the group was restructured in 2018.
That move saw Eason demerge its retail and property arms into separate legal entities to free up capital (€19.4 million) to invest in the retail business and for payouts to shareholders.
Eason had planned to sell the O’Connell Street outlet as part of the restructuring plan but the impact of the pandemic and the current inflationary environment have hit valuations for retail properties. The company has now decided to hold on to the property in the hope of achieving a better price at some point in the future.
Mr Dilger told Eason shareholders that the O’Connell Street store has been acquired by Eason Retail plc with the property entity now liquidated following this latest distribution.
The retail entity also owns an Eason shop in Blanchardstown, which was acquired last year and is valued at €9.6 million.
Mr Dilger told shareholders that the board and management of the company did not view the retail business as a long-term holder of the property assets, which could be sold when market conditions were more favourable.
Eason shareholders continue to own the retail business, which was independently valued at €67 million at the end of the last year. Mr Dilger said the retail entity was capable of generating sustainable returns for shareholders into the future.
Over the past four years, Eason has sold properties in Athlone, Carlow, Clonmel, Cork, Dún Laoghaire, Galway, Limerick, Tallaght, Tralee, and two warehouses in Dublin. Many of these involved sale and leaseback arrangements, with Eason continuing to trade from the sites.
Accounts for Eason Retail plc show that its revenue rose by almost 12 per cent to €104 million in the 12 months to January 30th, 2022.
But its sales were still 9.7 per cent below its pre-Covid trading levels on a group basis and 34 per cent lower in like-for-like terms for its shops, which resulted in an €8 million “margin hit”.
“Turnover for full year ‘23 is expected to be down 30 per cent on the same pre-Covid numbers reflecting the slow return of customers to retail stores,” Mr Dilger told shareholders at the time of the release of the results. “Unfortunately, we believe the significant challenges facing city centre locations, particularly in Dublin, will be long-lasting.”
Eason’s after-tax profit rose to €3.4 million last year from €759,000 a year earlier.