Ecco says it is shutting Grafton Street store over rent increase demand

Danish-Irish shoe retailer Ecco Ireland will next week shut its store on Dublin's prime shopping zone, Grafton Street, because it says it would be unable to make money following the latest rental demands of its landlord, Irish Life.

Ecco Ireland, which operates 18 stores in the State, opened the store in January 2015 on a 10-year lease at a rent believed to be about €210,000 per year. The lease had a rent review and also a break clause after five years.

Senior staff at the retailer were told by Ecco that Irish Life was seeking to hike the rent by as much as 70 per cent as part of the rent review. Staff were told that Ecco wanted to continue rent the store, but the company was simply unwilling to match what Irish Life was seeking.

Irish Life, however, insists that the rent offered by Ecco was “below market rates” and that the decision to leave was Ecco’s alone.

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Ecco Ireland is a 50-50 joint venture between its managing director, Cork businessman Paul Lyons, and a Dutch entity owned by the Ecco shoe manufacturer, which was originally founded in Copenhagen.

Fifteen employees

Mr Lyons confirmed last night that the store will close next week. He said the staff would all be reassigned to its other Dublin outlets. The store opened five years ago with about 15 employees. When asked to confirm why the store was closing, he said it was “because the rent review was too high”.

“We are departing because we couldn’t justify staying in it” at the rent that Irish Life is said to have been seeking.

“We were very happy on Grafton Street. But we will be immediately looking for a new location in the city centre,” said Mr Lyons.

“Ecco have been a valued tenant of Irish Life since 2015,” said the landlord. “Following their decision to activate a break clause in their contract, Ecco themselves have offered a rent proposal substantially below current market rates and this offer has been rejected by Irish Life.”

Six weeks ago, Grafton Street was named the 13th most expensive shopping street in the world by property agency Cushman & Wakefield, and the seventh most expensive in Europe, with rents averaging €3,794 per sq m per year.

Wholesaler

As well as its 18 retail outlets, Ecco Ireland is also the wholesaler of Ecco shoes for the island of Ireland, supplying an estimated 250 other retailers. Its latest accounts, for 2015, show its turnover was flat at €15.5 million while it made a net profit of €143,000.

About 70 per cent of its sales were generated by its retail division, while the remainder came from its wholesale activities. The group employs about 150 staff.

Ecco Ireland operates under licence from the Danish shoe manufacturer, which picks up a fee of 1 per cent of sales quarter. The Irish group also bought €8.2 million worth of stock from the Danish group in 2018.