Inside the world of business
Some way from heady days of ‘Breakfast-Roll Man’
THE CONVENIENCE store market seemed to have its growth strategy knocked out of it when the construction boom imploded, but the announcement of a €23 million investment by Centra’s retail partners suggests a recovery is probably, like the brand itself, just around the corner.
Centra said yesterday it would add 17 new stores and 500 jobs – a mix of full- and part-time positions – to its network in 2011, as more independent retailers sign up to the chain’s teal and yellow colours.
Much, though far from all, of the expansion lies in existing retail site conversions. Some 200 of the jobs are at greenfield sites, however, which is encouraging. In any case, operating a convenience store in the current market indicates a degree of confidence in the future, given that sales are still in decline.
Using figures extrapolated from TNS research, combined with TSR and Scantrack data, Centra says its sales have dropped 2 per cent over the past year. However, it states that this means it has outperformed the overall convenience market, the annual decline of which it puts at 6.5 per cent.
This is not out of line with the latest Central Statistics Office (CSO) data for the total food, beverages and tobacco market, which declined 4.6 per cent in value terms and 2.2 per cent in volume in the year to November.
It is, as Centra managing director Martin Kelleher puts it, “a difficult trading environment”; certainly a long way from the breakfast-roll trade of old.
It’s evidence of subdued consumers continuing to strip back on any vaguely non-essential purchases, and even a few essential ones.
The convenience groceries market, like the rest of the retail sector, is still waiting for a catalyst to change that.
DAA’s tough stance with Ryanair might pay off yet
THE SHOCK decline in traffic through Shannon airport since the turn of the year may not be so shocking after all.
Passenger numbers fell by a third in January to 92,000. It’s a trend which if continued would see activity fall back to levels not seen for 20 years.
The drop is almost entirely attributable to the ending last September of a five-year deal between Ryanair and the airport, according to the DAA.
The budget airline has now cut the number of aircraft based at Shannon from four to one and the number of services from 18 to 10.
Ryanair and the DAA were unable to agree a new deal, with the DAA accusing the airline of not meeting the terms of the previous deal, seeking unrealistic charges and so on. Ryanair for its part blamed a 33 per cent increase in passenger charges and the €10 air travel tax for pulling out.
Taking a tough line with Ryanair has already paid dividends, the DAA believes, with the decision of Aer Lingus to introduce a number of new services a case in point. Indeed, Ryanair has returned with its tail at least partially between its legs, announcing a new Fuerteventura service from February as well as the reinstatement of Nantes, Malaga and Palma-Mallorca services.
It is perhaps a little early to declare victory in this particular skirmish in the ongoing war between the DAA and Ryanair, but the passenger figures for Shannon this year will be illuminating.
Nama sure to keep eye on RBS loan sales
LLOYDS AND Royal Bank of Scotland are both due to report full-year results this week, and no doubt both will update investors on their exposure to the Irish market via their respective subsidiaries here.
RBS is apparently on track with a five-year plan to dispose of £250 billion worth of non-core assets, which include much of the Ulster Bank commercial mortgage book. Some £44 billion worth of property loans are earmarked for sale and the bank is pressing ahead with the first £1.6 billion worth of them, according to reports in the UK press. Non-disclosure agreements have been signed with a number of private equity groups, one of whom RBS hopes will take a significant minority stake in the £1.6 billion portfolio while also managing it and injecting equity as needed.
It is unlikely that any of the group’s Irish loans have been included in the portfolio as RBS is unlikely to want to muddy the water for what, if it is successful, will be a template for further transactions, both for itself and probably for Lloyds, which has a similar-sized problem.
The deal will not, however, be without Irish interest as the National Asset Management Agency will no doubt be watching. Nama took another significant step on the road towards managing – rather than just acquiring – assets last week with the sale of the Montevetro building to Google.
While such high-profile deals are very positive from the perspective of kick-starting the commercial property market and attracting buyers, the agency would like to sell portfolios of loans.
The deal along the lines of the one being contemplated by RBS – codenamed Project Monaco – could be attractive to Nama for a couple of reasons. The handing-over of the management of the loans to a third party would obviously reduce the burden on what is clearly a stretched organisation. Equally, the commitment of the investors to inject equity as required avoids the thorny issue of Nama being seen to continue to fund developers. And the final attraction is that, because Nama would retain a stake in the portfolio, the taxpayer would benefit from any future profit.
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