Waterstone's Ireland suffers loss after tax of €8m

WATERSTONE’S IRELAND, which will close two of its five Irish stores tomorrow, suffered a loss after tax of €8 million in the year to April 24th, 2010, compared to a profit of €1.2 million the previous year.

Accounts filed for Waterstone’s Booksellers Ireland Ltd show the loss was due mainly to a €8 million goodwill impairment cost.

Excluding the impairment charge – classified in the accounts as an exceptional item – the company made an operating profit of just over €300,000, in itself a 60 per cent fall from the operating profit of almost €750,000 recorded the previous year.

According to the accounts, the fall in operating profits largely reflected a decline in sales. Revenues fell by 12. 2 per cent in the year to €21.7 million, down from €24.7 million the previous year.

In addition to the €8 million impairment charge on goodwill, which arose following a review of the carrying value of goodwill, the company also booked a €471,000 impairment charge on the value of property, plant and equipment.

An interim dividend of €10 million was paid to the company’s parent, HMV, during the period, which was brought forward from reserves.

The accounts, which were signed off less than four months before the store closures were announced, state that “the directors consider that the company has traded successfully to date and it is intended that the company will continue its existing businesses for the foreseeable future”.

A spokesman for Waterstone’s said yesterday that the closure of the stores in Dublin’s Jervis Centre and Dawson Street was due to “commercial reasons”.

Waterstone’s continues to operate Hodges Figgis on Dublin’s Dawson Street as well as stores in Cork and Drogheda.

According to the accounts, Waterstone’s Ireland employed, on average, 146 people last year. Employee costs totalled just over €4 million.

Some 46 people were employed at the two stores in Dawson Street and the Jervis Centre. The company said that, while an effort would be made to redeploy employees, compulsory redundancies were inevitable.

Waterstone’s is part of the HMV Group, having been acquired by HMV in 1998. Last month that company issued a profit-warning for the 2011 financial year following an extremely poor Christmas season.

It announced plans to close 20 Waterstone’s branches in the UK and Ireland as well as 40 HMV stores. To date 14 of the 20 shop closures have been confirmed.