How bookies are back in business, Gaelic games have come to Asian homes and Connacht rugby gets a ride to the big-time, writes CIARAN HANCOCK
Eason plans to continue growth
EASON'S MANAGING director Conor Whelan was in Mullingar, Co Westmeath, yesterday to open its latest franchise book store. Eason has teamed up in the midlands town with local businessman Pacelli Lynch, who already holds a franchise with the company in Cavan.
Eason will open other franchises in Balbriggan in Dublin, Carlow and Kilkenny before the year is out and Whelan hopes to bring the total to 32 within three years from its current level of 18.
The four new stores this year will create up to 50 jobs and form part of a €20 million retail investment by Eason, which is also pursuing a separate online strategy to help grow the business.
It’s an aggressive expansion of the brand to say the least, given the “challenging” retail environment for book sellers, who are suffering both from a weak economy and the growth in online sales and e-readers.
Just last week, Borders, one of the big two book retailers in the US, went into liquidation. In Ireland, Waterstones has closed shops while local chain Hughes Hughes ran into difficulties before being resurrected.
“I’m from a Spar background, so I’m keen to develop it [franchising] and I think it’s a growth opportunity for us,” Whelan tells me yesterday.
“We’ve identified a number of locations around the country that we think would be suitable for franchises.”
Franchisees pay an annual fee to Eason and also buy their stock through the company’s wholesale business.
Whelan says trading remains “very challenging”, which is no surprise given that the figures from the Central Statistics Office yesterday showed that Irish retail sales fell by 4.2 per cent year on year in June, when the motor trade was excluded.
“On a like-for-like basis, we’re about 5 per cent down year on year, which is probably better than the overall [book and stationery] market,” Whelan reports.
“It’s still very challenging, although it has improved marginally in the past couple of months.”
Virtually all categories are being affected negatively, although Whelan says newspapers and magazines are probably the worst performers.
Greeting cards are up though – a result of some competitors ceasing trading.
Sales over the Christmas and new year period account for about 40 per cent of Eason’s revenues so Whelan is, naturally enough, nervous about the effect on consumer demand from another harsh budget in December.
“I wish he’d [minister for finance] move the date of the budget,” he quipped.
Lobby airs plan to save Luxembourg-Dublin route
LUXAIR'S DECISION to axe its four times a week service from Dublin to Luxembourg has caused consternation among the 1,500-strong Irish community there, along with members of the financial sector.
The decision means there will be no direct link between Ireland and Luxembourg when the route closes in October.
Luxembourg and Ireland are two of the largest centres for the funds industry in Europe and there are other business and tourism links.
Luxair, which is part state-owned, has cited substantial losses as the reason for closing the route. It operates a 49-seater plane and argues that a bigger aircraft is needed to allow it launch a daily service that could capture the business market.
A lobby group called Savetheluxdubroute.com has been fighting the decision, gaining the support of Fine Gael MEP and presidential candidate Gay Mitchell, mayor of Luxembourg Paul Helminger, and the Luxembourg Bankers Association, to retain the route.
But it seems that Luxair's decision is cast in stone. At a meeting this week, Luxair shared some financials with the lobbyists.
"It [Luxair] would need a much larger plane running a daily morning and evening flight to capture the lucrative business market in order to be sustainable," Luxembourg-based Irish woman Hilary Fitzgibbon said in an e-mail to fellow campaigners.
"Unfortunately Luxair has a very small fleet and cannot provide this service."
Plan B, she said, will see them canvass Aer Lingus and CityJet to launch a route. And there might be a chink of light on that front.
CityJet's chief executive Christine Ourmieres told me yesterday that it would be meeting the Dublin Airport Authority in the next couple of weeks to see if starting this route would be a "financially viable option for us".
Musgrave reports on shelf life in UK
WHILE MUSGRAVE was moving ahead this week with the purchase of rival Superquinn in Ireland, accounts for its wholesale and retail grocery business in the UK were filed at the companies office there.
Latest accounts for Musgrave Retail Partners GB Ltd show its turnover there fell by 2 per cent to £907 million in 2010, although its operating profit roughly trebled to £3.4 million following careful cost management.
"This is a satisfactory performance given the challenging trading environment in the grocery market in Great Britain in 2010," Musgrave's directors reported.
Musgrave operates the Budgens and Londis brands in the UK, using the same model as it does in Ireland by supplying shops owned by independent retailers.
No dividend was paid to Musgrave during the year. Instead, the surplus was used to reduce its accumulated losses to £489,000.
The GB division closed the year with net assets of £153 million and net cash of £17 million.
The average number of employees at the company fell to 1,477 last year from 1,853 in 2009.
The company shaved almost £4 million off its wage bill to about £46 million.
Last year was a busy one in terms of retailer recruitment for Musgrave in Britain.
More than 200 joined the Londis brand, bringing the total to 1,784 at year end.
It also opened a new store each month under the Budgens brand and divested to independent ownership the first of 13 Somerfield stores bought in 2009.
Musgrave has been slowly building its business in the UK over the past decade or so.
It only entered the black in 2009 after several years of investment and integration costs.
In Ireland, Musgrave's main brands are SuperValu and Centra.
Adding Superquinn to its stable will see Musgrave overtake Tesco as the country's biggest grocery group.
Mazda lines out for Connacht Rugby
CONNACHT RUGBY has signed a lucrative deal with Mazda to become its main sponsor as it prepares to compete in the Heineken Cup for the first time.
Mazda replaces Bank of Ireland as title sponsor. The bank has been kicked into touch after 14 years as jersey sponsor.
It is understood Mazda offered significantly more than the State-funded bank to secure the sponsorship, with the added carrot of providing vehicles to Connacht for the duration of the deal.
Sources tell me Bank of Ireland's deal was worth about €100,000 annually.
Aer Arann will continue to feature on the back of the Connacht jersey.
The Mazda deal is one part of a wider move by Connacht to bolster its finances and secure the future of a professional team for the province, which has traditionally been the bridesmaid of Irish rugby.
Bank of Ireland yesterday confirmed to me its deal with Connacht had ended.
Donal Flynn, regional manager west for Bank of Ireland, said the partnership had produced a number of "memorable moments" over the period and had delivered "real benefits" to both sides.
This doesn't end Bank of Ireland's association with provincial rugby here.
Earlier this year, the bank renewed its deal with Heineken Cup champions Leinster out to 2015.
Little things
KLEINWORT BENSON Investors International, the asset manager with offices in Dublin and New York, has been appointed as investment adviser to the New Ireland Fund.
This is a $60 million US-based, closed-end fund designed for those who want to invest in Irish equities.
The mandate was previously held by Bank of Ireland Asset Management, which now trades as State Street Global Advisers.
KBI International had €3.5 billion in assets under management worldwide at the end of June.
ALL THE talk in banking circles this week was about the identity of the group of investors in Bank of Ireland.
But one new shareholder that went quietly under the radar was none other than its biggest rival here – Allied Irish Banks.
AIB had held some of Bank of Ireland's subordinated bonds.
As part of the deal with bondholders under Bank of Ireland's latest capital-raising exercise, AIB opted to take shares in its rival rather than cash.
AIB now owns a stake worth somewhere in "the mid-teen millions" in euro, a source told me.
So AIB, which is 99.8 per cent owned by the state, now owns less than 1 per cent of Bank of Ireland, of which, in turn, is 15 per cent owned by taxpayers.
You couldn't make it up.
SETANTA SPORTS has sold its share of a joint venture in Canada.
The Irish business had a majority share of Setanta Canada but co-founder Michael O'Rourke (below) confirmed to me this week that
its fellow shareholder, Rogers Communications, has acquired its holding.
"They made us an offer and we accepted it," O'Rourke said, although he declined to reveal a figure.
That leaves Setanta with channels in Ireland, Australia and Asia, which launched a year ago.
"Asia is going well for us," O'Rourke said, adding that the company has just inked a distribution deal with SingTel in Singapore.
O'Rourke said it was available in about five million homes in Asia. "We're showing live Gaelic games there for the first time and there's a heavy focus on rugby."
