Millen's Irish outlets under pressure to get rent cuts
on 15/02/2013 00:00:00
A note attached to the firm's 2012 accounts states that the viable business plan "is to some extent subject to a successful outcome of negotiations with landlords of the company to reduce the rent levels payable on the company's property leases".
The requirement to secure rent reductions comes as accounts show losses more than tripled to €1m after revenues declined by 23%, from €10.8m to €8.8m in the 12 months to the end of Feb 29 last.
The firm last year paid €1.6m in lease rentals - representing 18% of revenues. Accumulated losses stood at €27.7m last year and shareholders' deficit stood at €2.1m.
A London-based spokeswoman for Karen Millen said: "We remain very committed to the Irish market, however, to our surprise, Irish landlords have been resistant to requests for rent reductions, which we feel just doesn't reflect economic reality.
"That said, negotiations are now progressing on all Karen Millen and Aurora brand stores in Ireland. We are hopeful we will be able to reach acceptable agreements that ensure we maintain on-going support from our bank and major shareholders."
The spokeswoman said that since year-end, "as is the case for many retailers, our Irish businesses continue to face considerable pressures in a tough European market".
The numbers employed by the firm last year declined from 118 to 90, with staff costs declining from €1.6m to €1.5m.
Directors expect support from the parent will continue at least until the business plan has been received by Karen Millen Group Ltd. The note adds: "The need to demonstrate a viable business plan, including securing a successful outcome to the negotiations with the company's landlords represents a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern."
Separate accounts filed by connected firm and Aurora Fashions subsidiary, Coast Stores Ireland Ltd, show that it is also seeking rent reductions to underpin a viable business plan.
The firm last year recorded a pre-tax profit of €200,000 following a pre-tax loss of €400,000 in spite of revenues decreasing by €1m, from €10.3m to €9.3m.
Numbers employed at the firm remained static at 128.