The board of Irish retailer Arnotts has secured a "credible", London-based financial backer with retail interests around Europe to help it bid for its loans held by Irish Bank Resolution Corporation, the company's chairman Nigel Blow has told The Irish Times.
Mr Blow declined to identify the backer but said its support had been secured following a long process to find a suitable partner to bid for the loans, which are being sold by IBRC's special liquidators. This process was led by corporate financiers at Investec.
Arnotts loans to IBRC amount to about €230 million in two tranches comprising retail and property close to its Henry Street store. Mr Blow said it was bidding for all of the loans.
Mr Blow said its backer was prepared to support the growth of Arnotts through the addition of between four and six new outlets.
“They are a credible financial backer who operate within retail who have had an interest in Arnotts for a very long time,” Mr Blow said. They have a lot of expertise to bring to the table.”
On the potential expansion of the business, Mr Blow said this would more likely be via homestores as opposed to “full-blown” department stores. “There’s a very strong case for expanding into homestores,” he said. “We have an incredible USP in furniture.”
Mr Blow said a recent warehouse sale of furniture, electrical and home goods at Furry Park, north Dublin, had yielded sales of €500,000 in 10 hours. “That’s what we would take on a typical Saturday in Arnotts. That’s an indication to us of the opportunity to trade outside of Henry Street.”
He cited Cork and Galway as likely areas of new openings, along with a couple of shops on the outskirts of Dublin. It also plans to expand its online offering.
Arnotts is not be the only bidder for its IBRC loans. Three or four groups are believed to have made the shortlist for the final round of bidding in early December, including UK retailer Selfridges, which is owned by Canadian businessman Galen Weston, who also owns Irish retailer Brown Thomas.
Acquisition
Mr Blow said Arnotts interests would not be best served by being purchased by a trade player, particularly one with an existing business in Ireland, as this would most likely lead to the brand being replaced over time and staff layoffs.
On Selfridges’ reported interest, Mr Blow said it “can’t be the right thing for the consumer or the company for them [Brown Thomas and Arnotts] to be owned by the same person [Galen Weston]”.
Mr Blow, previously a senior executive with Brown Thomas, believes that any acquisition by Selfridges would result in a number of functions being centralised and up to 100 job losses at Arnotts.
“You would also have to imagine that over time the Arnotts brand wouldn’t be above the door,” he added.
In addition to the IBRC loans, Arnotts also owes about €140 million to Ulster Bank. The banks took control of the business in 2010 after Arnotts’ proposed Northern Quarter commercial development bit the dust.
Mr Blow declined to comment on Ulster Bank’s position in relation to Arnotts’ IBRC loans except to say that it had been “supportive” of the company over the past number of years. On current trading, Mr Blow said sales were up across all categories, including furniture, which has suffered more than most since the economy crashed.
“Finally the [furniture] order book is ahead of last year for the first time in about five years,” he said.
“Arnotts is trading well at the moment but a lot will depend on our sales over Christmas and the new year.”
