Ireland’s debt-ridden department store Arnotts got a new lease on life this week via different owners and a new chairman from the U.S., Mark Schwartz.
Schwartz, chief executive officer of Boston-based Palladin Capital Group Inc., and his team from Palladin, which includes Tobias Nanda, are leading the restructuring efforts at the Dublin retailer. Schwartz was elected chairman of Arnotts on Tuesday. His firm was hired by the retailer’s banks earlier this year to analyze the department store’s operations. Richard Nesbitt, the outgoing chairman, will stay on as a non-executive director. In an interview Tuesday, Schwartz said the senior executive management positions will be under review over the next few weeks.
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The new owners are the state-owned banks Anglo Irish Bank in Ireland and Ulster Bank, which is owned by the Royal Bank of Scotland, in the U.K. They received permission on Monday from the European Commission to take control of Arnotts, Ireland’s oldest department store, a requirement since the banks are state-owned.
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With the financial restructuring completed and a new working capital facility, Schwartz’s team is setting out to overhaul the retailer’s operations.
The department store includes a Topshop franchise and a Gap concession on the premises, and is an authorized Apple reseller. Among its major apparel and accessories brands are Ted Baker, Polo Jeans, Mango, Guess, French Connection and Jaeger.
Although still early in the game, the hope is that a revitalized Arnotts will attract outside investment, perhaps even an initial public offering.
“Arnotts is an iconic department store that sells all the major categories, from fashion apparel to beauty and home,” Schwartz said.
He described the target customer as a married working woman in her late 30s with two kids: “She doesn’t need to be dressed from head to toe with designer apparel, but will have a piece here and there.”
Although Arnotts “got hit pretty hard” when Ireland’s economy tanked in recent years, Schwartz said there are signs of stabilization, with sales picking up. “Sales are strong year-over-year and we see high-single-digit improvement in comparable-store sales. The margins are improving,” he said.
Arnotts, founded in Dublin in 1843, is located on Henry Street on the north side of the city center, and occupies 600,000 square feet, about half of it for selling.
The retailer was taken private in 2002 by the Nesbitt and O’Connor families, with the latter selling their stake to Richard Nesbitt and Boundary Capital, the investment arm of financier Niall McFadden.
Nesbitt and later McFadden dreamed of rebuilding the area around the store, known as the Northern Quarter, into a commercial, residential, hotel and retail hub and, beginning in 2003, bought 5 acres of land for redevelopment. However, the economic downturn got in the way, and their 750 million euro (about $850 million, at the time) dream turned into a 320 million euro (about $420 million) debt nightmare on the company’s balance sheet.