DUBLIN-BASED department store Arnotts made a record loss of €295 million last year as it booked a massive writedown of property assets connected with the Northern Quarter retail project that has been shelved.
Arnotts, which is jointly controlled by its lenders Anglo Irish Bank and Ulster Bank, took a writedown of €248.6 million relating to property assets last year.
The interest bill on its borrowings for the year to the end of January 2010 came to €16.4 million. Its bank debt stood at €282 million at the end of the period. Accounts released by the company yesterday state Anglo and Ulster Bank will not seek repayment of the debt “in the medium term”.
Arnotts made an operating loss on continuing operations of €9.2 million last year, reflecting the recession’s impact on its sales.
This was €1.1 million higher than for the previous 12 months.
Arnotts also made a loss of €6 million on its outlet in the Jervis shopping centre, which is located close to its flagship Henry Street department store in Dublin.
Jervis was to have provided a temporary home to Arnotts during the construction of the proposed €750 million Northern Quarter project, which fell victim to the collapse in the property market.
But Arnotts closed the Jervis shop during the year, paying €4 million to quit the lease.
At a trading level, sales from its continuing operations – which comprise the Henry Street store, a shoe shop in Stillorgan and its Boyers subsidiary on North Earl Street in Dublin – fell by 25 per cent last year to €120.7 million.
Arnotts underwent a major restructuring after the year-end.
In August 2010 the European Commission gave Anglo and Ulster Bank the green light to take over the business, which had been controlled by barrister Richard Nesbitt.
US consultants Palladin Capital took control in August and a new management team was put in place, led by former Brown Thomas boss Nigel Blow.
Speaking to The Irish Times yesterday, Arnotts chairman Mark Schwartz, who runs Palladin Capital, said changes implemented in 2010 would result in a “mid single digit” rise in sales for the current financial year, which closes at the end of this month.
He said earnings before interest, tax, depreciation and amortisation (Ebitda) in the current financial year would be “significantly higher” than the €2.5 million surplus posted for the 12 months to the end of January 2009. Arnotts’ Ebitda last year was just €117,000.
Commenting on the disruptive effects of the snow on Christmas trading, Mr Blow said: “We were 5 per cent below last year, which all told we’re comfortable with. And since Christmas we’ve been trading well. There’s been a lot of cost-cutting in terms of right-sizing the business and making sure we have the right products . . .
“We’re now seeing the effects drop to the bottom line. We’re in a great position as we move into 2011.”
