The Caulfield McCarthy Group is one of Ireland’s largest, and most successful, regional retailers. The business controls three Supervalu supermarkets in Cork, Waterford and Kilkenny, and also manages a significant property portfolio, including three shopping centres.

The business previously had even more assets, but the company took the decision to offload a site in Malahide in late 2019 and followed this up with by the sale of a leasehold on a supermarket in Cork the following year. The disposals netted the group a profit of €3.3 million and allowed it to pay down bank debt. For the year to the end of March 2020, it had revenues of €56.9 million and posted a pre-tax profit of €4 million.

The group, owned by the Caulfield family and John McCarthy, might be a major presence in the south of Ireland, but compared to Mike Ashley’s retail empire, it is something of a minnow. In Ireland alone, the outspoken UK businessman controls more than 30 stores, most of which trade under the Sports Direct or Heatons brand. More recently, he acquired the House of Fraser department store in Dundrum, and, as first reported by The Currency, has just announced the opening of two new Frasers stores on sites previously occupied by Debenhams.

However, Ashley’s corporate size and financial strength has not prevented the Caulfield McCarthy Group from going to court in an effort to secure what it contends it is owed in outstanding rents.

In recent days, Novoscat, a group company that owns the Hypermarket shopping centre in Waterford, has issued a High Court action case against Heatons Unlimited. The company is seeking summary judgement against the UK retailer over rental payments.

The Caulfield McCarthy Group owns the shopping centre, as well as the Riverview Shopping Centre in Bandon and the Loughboy Shopping Centre in Kilkenny. The Irish retailer is represented by the commercial law firm Arthur Cox in the case.

The case is the latest in a growing number of actions between landlords and tenants, and the fifth action against Heatons. Since the pandemic reached Ireland in March last year, The Currency has identified at least 57 other High Court actions in which a landlord issued summary proceedings (seeking payment) against a retail or restaurant tenant. Of these, some 18 have been adjourned or struck out, while 38 remain live. Most of the High Court actions involve well known national and international brands.

Last week, for example, Hurley Property Icav, an investment fund managed by Goodbody, issued an application for summary judgement against Abrakebabra and the Bagel Factory. Both are controlled by the successful food entrepreneur Graeme Beere. The Goodbody fund has previously sued Eason at Athlone Town Centre and Lifestyle Sports at Kilkenny McDonagh Junction, although this latter case was quickly discontinued).

Ashley’s Irish property woes

Even before Covid-19 and the various high street shutdowns, Mike Ashley was already feeling property pain in Ireland. The approved accounts for Heatons Unlimited, the businessman’s main Irish company, for the year ending April 28, 2019 show falling sales, a hefty loss and significant issues with its property leases.

The directors flagged property as its biggest issue, and the company behind Heatons and Sports Direct in Ireland made a provision for onerous leases of a whopping €26.8 million during the year.

The company said the provision was made due to “the challenging trading conditions experienced during the year and envisaged to continue into the future”.

The provision was made against the company’s long-term leasehold property leases and its short-term property leases. It is, in essence, a negative hedge on the future resilience of Irish retail and commercial property.