Disney is likely to have offered Laura Ashley a premium of at least €300,000 for the key to its store, writes JACK FAGAN
ENTERTAINMENT giant Disney is planning to open a store before the end of the year on Dublin’s Grafton Street.
The company is in advanced discussions to take over the Laura Ashley outlet after offering the fashion and furnishing retailer substantial key money for the premises.
Disney originally targeted the former Dunnes Stores, next to Laura Ashley, but was apparently rebuffed by the Irish supermarket chain. Dunnes’ double-fronted building has been lying vacant for well over a year despite its pivotal position near the top of Grafton Street. The prolonged closure of the store has reinforced the view that Grafton Street is still on the slide. Had it opted to let the building, Dunnes could have expected to get an annual rent of well over €1 million.
The arrival of Disney is certain to prove a major boost for the street, attracting thousands of children and their parents, at a time when the street has been suffering from a downturn in spending despite having the fourth most expensive rents in Europe. Disney is likely to have offered Laura Ashley a premium of at least €300,000 for the key.
Laura Ashley recently renewed its lease of the Grafton Street building at a rent of €950,000 – the previous rent was €730,000. Any assignment of the lease will require the consent of the landlord, financial services group Friends First. It is understood that Laura Ashley has not so far approached Friends First. CBRE advised Disney.
The lay-out of the building is ideal for Disney, having a floor area of 994sq m (10,700sq ft), including about 557sq m (6,000sq ft) of retail space at basement, ground and first floors. The configuration allows for substantial storage – something Disney requires in all its retail outlets.
Disney’s strategy is to locate on high streets in major cities. It has flagship stores on Oxford Street in London and the Champs-Élysées in Paris. It has 104 stores in France, Spain, Italy and Portugal, and 56 in the UK.
Like other traders specialising in home furnishings, Laura Ashley has been affected by the reduced level of consumer spending over the past two years. Last December it was reported that the company made a profit of €413,208 from its Irish stores in the year to January, 2009, less than a third of its net profits in the previous year. The fall in profits, down from €1.4 million in the year to January 2008, was due to higher costs and expenses. Pre-tax profits fell from €1.9 million to €550,225 in 2008.
Laura Ashley has stores in Cork, Limerick, Galway, Athlone and Blanchardstown, as well as Grafton Street. It also has a concession in the House of Fraser in Dundrum.
There are at least five shops available for lease on Grafton Street – most of them over-rented.
The most notable of these is the former ICS unit near the bottom of the street which has been vacant since June 2008. It has a tiny floor area at street level, only 23.2sq m (250sq ft), and overhead accommodation. ICS has found it hard to assign the lease or sub-let the premises because of the high rent of €250,000 per annum.
The landlord, AIB Investment Managers, has apparently refused to allow ICS to sub-let the premises at a lower rent because of the long-term implications.
The lease is not due to run out for another seven years.
