The Irish arm of catalogue retailer, Argos has been hit with a €43.4 million cost arising from its decision earlier this year to shut down its store network here with the loss of 580 jobs.
Last June, Argos shut down its Republic of Ireland operation after concluding the investment required to make its operation here profitable was too large to be viable.
Now, new accounts filed by Argos Distributors (Ireland) Ltd provide detail on the costs to the company of the decision to pull out of the Republic.
Closure costs of €43.4 million have been recognised in the new accounts and the largest component is redundancy costs of €23.2 million.
Those workers eligible were offered an “enhanced redundancy package” where workers were to receive an additional four weeks’ pay per year of service on top of statutory redundancy requirements, bringing the total redundancy package offered to six weeks’ pay per year of service.
The small proportion of staff not eligible for redundancy under Irish law were offered a one-off goodwill payment.
The €43 million cost also includes closure provisions of €7.03 million, write-down of leased assets of €9.8 million, €1.6 million in write-downs of property, plant and equipment and €1.73million consultancy costs.
The costs contributed to the firm -which is owned by the UK based J Sainsbury plc - recording a pre-tax loss of €24.1 million for the 12 months to the end of March 4th -which was almost double the €13.06 million pre-tax loss recorded in the prior year.
The losses for this year would have been much greater but for the company booking a €29.96 million gain on the €227 million sale of its investment in the Home Retail Group (Finance) LLP to Argos Ltd during the year.
Home Retail Group (Finance) LLP acts principally as a financing and investment holding business.
During the year, revenues at the Irish unit of Argos declined by €12.8 million or 9.5 per cent from €133.76 million to €120.95 million as the number of stores operating during the year reduced from 35 to 34.
The number of stores still in operation last June totalled 30 and directors state that the final stores closed by June 24th last and “lease exits are in the process of being negotiated and leases will run till the end of their term".
They state that as the company has ceased to trade and will eventually be wound down, “it is currently addressing outstanding legal and regulatory obligations as part of the winding down process”.
The directors add that “the company continues to settle residual liabilities and collect outstanding receivable balances.”
Staff costs last year declined from €16.2 million to €14.48 million as numbers employed reduced from 754 to 612 made up of 450 part-time and 162 full-time.
The loss also takes account of non-cash depreciation costs of €3.22 million. Shareholder funds on March 4th last totalled €215.77 million which was made up of called up share capital of €226.4 million off-set by accumulated losses of €10.4 million.
The business’s cash funds decreased from €3.3 million to €2.57 million.
