LISTED DEPARTMENT store group Debenhams experienced a 65 per cent drop in profits in Ireland last year as the recession and a collapse in consumer spending hit trading.
Accounts just filed for Debenhams Retail (Ireland) Ltd show that it made an after-tax profit of €5.1 million in the 12 months to the end of August 2009. This compared with a bottom-line surplus of €14.5 million the previous year.
No dividend was paid to its London-listed parent company, with the profit recorded in 2009 boosting the Irish entity’s reserves to €25.2 million at the year end.
The directors’ report states that the “external commercial environment” for Debenhams in Ireland is expected to “remain challenging in 2010”.
Debenhams sales in Ireland fell by 9.9 per cent last year to €188.3 million, while its cost of sales was down 3.3 per cent to €175.5 million.
The retailer generated an operating profit of €7.9 million during the year, down from €20.8 million in 2008. Its interest payments halved to €1.9 million, while its tax bill declined by 61 per cent to €881,000.
Debenhams has 11 stores in the Republic, which employed 1,826 last year. Some of these stores were bought from the former Irish department store chain Roches Stores, including its flagship outlet on Henry Street in Dublin.
The company’s total employment costs in Ireland last year were flat at €41.9 million.
Earlier this year, Debenhams announced plans to trim its Irish workforce “to ensure that the business has the flexible and right-sized workforce that it needs for the future”. The accounts show that Debenhams has set aside €11.3 million for the costs of the redundancy programme.
About 150 full-time equivalent voluntary redundancies were sought and it is understood that the staff will have left by the end of this month.
The retailer indicated that Debenhams paid €24.2 million in rents last year.
The accounts also show that a non-trading related company, Debenhams Retail Holdings (Ireland) Ltd (DRHI), paid it €46.5 million by way of loan notes on October 26th, 2009. This money was used to repay a balance due to fellow subsidiary Debenhams Retail plc.
Curiously, the money was paid to DRHI in the first place by Debenhams Retail plc.
No comment was available from Debenhams at press time.
In April, Debenhams reported that sales in the first six months of its financial year had risen by 0.3 per cent. It said poor weather in early January had affected sales in Britain and Ireland but they had “recovered in the final weeks of the half [year]”.
