HUGHES Hughes, the bookshop chain, went into receivership last night, putting more than 200 jobs at risk. Difficulties in negotiating lower rents and a collapse in passenger numbers at Dublin and Cork airports, where the majority of its business is generated, were blamed for the insolvency. The company also cited the impact on bookselling of online sales through outlets like Amazon.
Insolvency expert David Carson, of accountancy firm Deloitte, has been appointed by Ulster Bank as receiver.
Hughes Hughes, which has been in business for 26 years and is one of the State’s best-known booksellers, cited “an unwillingness [of landlords] to reduce rents”, both on the high street and in airports, as a contributory factor.
It noted that this attitude was “in stark contrast” to the approach of its 225 employees, who had taken pay cuts to support the business.
The chain, which sells books, newspapers, magazines, stationery and confectionery, said that its concessions at Dublin and Cork airports have been particularly badly hit by dwindling passenger numbers.
However, industry observers pointed to the company’s rapid growth in recent years as playing a significant role in its downfall. The chain expanded its presence in shopping malls such as the Pavilions Shopping Centre in Swords and Dundrum Town Centre at the height of the boom, locking itself into high rents.
It is believed the store’s peripheral positioning in Dundrum also proved problematic.
It is understood that its airport outlets have remained profitable during the chain’s expansion. However, falling passenger numbers may have reduced the surplus available to the group from these outlets to fund other stores.
The company is understood to be keeping open its airport units for the time being.
Speculation about the company’s propsects of survival had been growing in recent weeks.
The company’s most recently-filed accounts show that it generated profits in excess of €500,000 in the period ended March 2nd, 2008. In those accounts, the directors expressed optimism that it would continue to trade profitably. However, its financial situation swiftly deteriorated since then.
In its statement yesterday, it said that a series of factors left it with no alternative but receivership. In addition to high rents, the exchange differential with sterling and the “revolutionary wave” of internet competition were blamed.
Retail industry groups criticised high rent levels last night.
“We have a situation whereby landlords are flatly refusing to even engage, let alone negotiate, on the issue of rent despite retailers citing this as the number one reason for failure in the sector,” Retail Excellence Ireland chief executive David Fitzsimons said.
The issue of “excessive rent” will not be resolved without direct Government intervention, he warned.
Retail Ireland’s director Torlach Denihan echoed this view: “The unwillingness to renegotiate and reduce rents shows the short-sightedness and stubbornness of landlords,” he said.
