Clerys: what a difference a year makes
Over the last year we have seen some high profile retail casualties hit the headlines, but Clerys one year on, has a different story. Fraser Pearce explains why.
Gordon Brothers Europe acquired Clerys in September 2012, after the group had fallen into difficulties as a combined result of the global recession and the Irish property crash. Since then, Gordon Brothers has been able to take the iconic Dublin department store from strength to strength, even with an extreme weather setback along the way.
The business has been trading since 1922 from its flagship department store on O’Connell Street in the heart of Dublin’s city centre, which was rebuilt after the famous Easter Rising in 1916. Prior to that Clerys can trace its origins back to the 19th century and is truly part of the Irish retail fabric. The business had expanded into three suburban Clerys Home Furnishing stores throughout the greater Dublin area. Its former owners, the Guiney family, started out trading from a discount store in Talbot Street close to the flagship department store, which formed part of the wider trading group. The business had acquired property assets in the mid 2000’s, financed through debt, in the expectation of a major redevelopment which never materialised once the global recession hit.
On acquiring Clerys debt from the Bank of Ireland, cutting-edge restructuring techniques in Ireland were used to create only the second pre-packaged receivership sale ever seen in the Republic. Gordon Brothers Europe agreed new working capital facilities and a more stable longer term financing platform for the business. A radical and innovative operational restructuring plan was put in place which saw renewed impetus and momentum brought to the department store. The shake-up plan included a root and branch review of all departments and product profitability by SKU, as well as a supplier audit, which saw non-core suppliers discontinued. An analysis of concession partners was conducted to review profitability and challenge sales volumes. As a result, where appropriate, new terms for concession partners were agreed and new concessions were brought into every department to freshen up trading.
Significant new inventory was purchased, eliminating stock-outs and investment was made in the fit-out of the menswear and ladies wear departments. Menswear was moved from own bought to concessioned and is now being led by a specialist retailer. New food offerings were established and investment into much needed marketing and point of sale material was provided.
A new management team was established. Dominic Prendergast, a seasoned Department Store operator, was appointed as Managing Director in November 2012, alongside a Buying Director, new buyers and an experienced Operations Director, to lead the team through the challenges ahead.
As a result of the restructuring plan and a thorough viability review, it was decided that two of the out-of-town stores (Management had closed the third store just prior to the acquisition) and the Dublin discount store would not be taken forward. Gordon Brothers subsequently managed to acquire certain assets from these stores, maximising value for creditors.
Preservation of the iconic store was the primary objective for Gordon Brothers Europe, as was securing employment for all staff and concession partners. Working alongside one of Ireland’s respected restructuring professionals, Paul McCann of Grant Thornton, Gordon Brothers Europe agreed settlement claims with trade suppliers in record time giving them confidence to continue trading with Clerys.
With the new management team in place, Clerys has returned to what it did best; running a more promotionally-led retail operation where smarter buying allows the store to sell good quality products at great value.
In July this year a mystery shopper article featured in ‘Menswear in Ireland’. The shoppers gave their verdict on the overall impression of the shopper experience as ‘...in short, excellent.’ The article stated, ‘Despite being in the throes of its popular summer sale, Clerys' menswear department was, like its staff, beautifully presented with not so much as a garment out of place.’ The article continued, ‘Its well-trained, friendly and helpful staff are a genuine asset, as indeed is an extensive menswear selection that genuinely offers something for almost everyone.’
Clerys hit the headlines in August 2013 when it was forced to close its doors to the public after incurring structural damage during a period of extreme weather, where heavy rainfall combined with thunder and lightning hit the iconic store, collapsing part of the roof.
The store, re-opened to the public on November 22, 2013, picking up the story just where we left off. The excitement and anticipation that built as shoppers were keen to visit the new-look store, meant queues formed hours before the doors opened. To view the re-opening as it happened, please click here.
Clerys, one year on is a true restructuring triumph where value preservation was safeguarded for its stakeholders including suppliers, concession partners and employees. The successful restructure is testament to the retail expertise from Gordon Brothers Europe and the hard work from Clerys employees, who remain the primary asset.
Gordon Brothers Europe has the ability to provide bespoke lending solutions for businesses in special situations, such as distressed acquisitions, financial and operational restructuring, refinancings, DIP financing, distressed debt purchase and funding turnarounds for long-term growth. These lending solutions are usually collateralised either against an asset or pool of assets bespoke to fit the circumstances.
In the last year, Gordon Brothers Europe has broadened its service offering, with the addition of the Valuation & Corporate Recovery group and the opening of new offices in the UK and Germany. They deliver asset valuations that are comprehensive and all-encompassing, enabling a lender, or advisor to make informed decisions. The expertise and knowledge the team brings covers all assets classes including accounts receivable, inventory, machinery & equipment, property and brand/intellectual property. It is this deep understanding of asset values coupled with financial capital that enables Gordon Brothers Europe comfortably to provide flexible finance solutions and make quick and intuitive investment decisions.