Why Some UK Stores are Hanging in

danjo-xx

I often wondered why they bothered but after reading an article in some paper the other day apparently the reason is that some of them entered into long leases and that the penalty for breaking the lease is very high so it's less costly for them to continue trading even at a loss which for example Harvey Norman is doing.

mike65

and still Marks and Sparks want to open a shop here! Gawd Bless 'em.

giles lynchwood

Harvey Norman are Australian.:)

Media999

Stupid attitude trying to suggest that UK companies are running at a loss. Wise up man.

Just because Waterford City is dead that doesnt mean they dont make money in every other city. Dont be so naive to think that Harvey Norman are running at a loss either.

padraig.od

Media999 wrote: »

Stupid attitude trying to suggest that UK companies are running at a loss. Wise up man.

Just because Waterford City is dead that doesnt mean they dont make money in every other city. Dont be so naive to think that Harvey Norman are running at a loss either.

Harvey Norman have been reporting massive loses in Ireland for years. As the OP says the only season they are still in Ireland is it would cost them more to break the leases on all the facilities they have rented.

sandin

Media999 wrote: »

Stupid attitude trying to suggest that UK companies are running at a loss. Wise up man.

Just because Waterford City is dead that doesnt mean they dont make money in every other city. Dont be so naive to think that Harvey Norman are running at a loss either.

HN running at a huge loss in Ireland. they "curtailed it" to €23m this year. Luckily the parent company makes about $400m ozzy dollars in profits.

Up til recently stores signed up to 25year - 35year leases and the rent would be reviewed every 5 years and be increased. Problem was, when the downturn came, there was nothing that allowed the rent to be decreased officially. Many did get rents decreased but it was purely at the landlord's discretion.

The big chain stores effectively cannot refuse to pay these rents even if business is crap or even if they decided to shut the shop unless the whole business is put into examinership / liquidation. Some were clever enouh to seperate their Irish operation for their international operations, but very few. Others have so many different brands they were able to muscle the landlords into dropping rents.

But overall, many retailers are losing money and can do absolutley nothing about it.

As for stores still wanting to open - the rents have fallen off the cliff for new leases and they can also be moved up and down leagally and via arbitration. A shop that in 2007 commanded a rent of 150,000/year can be had for less than 50,000 a year. Staff costs are cheaper too as is the cost of fit-out.

I'm recently back in the retail game after getting out when things got crazy and plan further openings this year because the cost base now matches the market.

abouttobebanned

Your inbox will soon be full of CVs haha

Which reminds me. Did you hear about that lad that was floating in the Suir, struggling for life...and a number of people gathered on the bridge and were heard to shout "WHERE DID YOU WORK??"