B&Q faces mammoth rescue mission

ANALYSIS:When B&Q opened in Ireland in 2002 it had big ambitions.

Its first store in Liffey Valley was a monster warehouse of 150,000sq ft.

We’d never seen the like of it before and the government decided that we shouldn’t again by changing the retail planning laws and restricting the DIY sheds to 64,000 sq ft.

Independent DIY retailers breathed a sigh of relief.

B&Q scrapped plans for a second super-sized warehouse in Blanchardstown and concentrated instead on miniature versions of the format as per the new planning rules.

It opened eight other stores here by 2008.

Such was the frenzy for DIY in Ireland a decade ago, and B&Q’s big ticket version of it, that the Liffey Valley store achieved sales of €1 million a week in its first year.

DIY fever

It was a staggering performance and reflected the giddiness attaching to the property market at the time.

Kitchens and bathrooms were being ripped out across the country, attics were being renovated and gardens decked with paving or patio slabs as we luxuriated in our new-found wealth.

Group revenue peaked at €124 million in the year to January 2009 before then slumping to an estimated €84 million in the financial year just closed.

One-third of B&Q’s revenue has been wiped out in the recession.

Hard as it tried, no amount of cost-cutting could compensate for such a collapse, especially when its annual rent bill remained stubbornly high at €11.6 million a year.

B&Q estimates this to be twice the level of current rent levels. It’s a familiar tale.

After providing €17 million in financial support to its Irish subsidiary in recent years, UK parent Kingfisher this week took away the safety net.

Examiner appointed

An interim examiner was appointed by the High Court yesterday and a race is now on to save the business.

Stores in Athlone and Waterford – where 92 staff are employed – have already been earmarked for the chop and another two are on the danger list.

Rent problem

Justice Peter Kelly stressed yesterday that the task of resolving the rent situation should not be underestimated and expressed the hope that a compromise could be reached with landlords.

This rescue mission is a do-it-yourself task of an altogether different kind for the company’s management team and the interim examiner, Declan McDonald of PwC.

Staff and suppliers will be hoping that McDonald will have the the necessary tools available to him to complete the job successfully.