THE LATEST chapter in the growth of Irish book retailer Hughes & Hughes will be written at the end of March with the opening of Terminal 5 (T5) at Heathrow.
Entrepreneur Derek Hughes has secured five-year contracts to operate two concessions at the new facility, which will be exclusively used by British Airways and is expected to handle 30 million passengers annually.
Hughes & Hughes will be the only Irish retailer in the £4.7 billion T5. It will have Gordon Ramsay's first airport restaurant, Harrods, Tiffany and Prada for company.
Hughes expects the shops to book a hefty €16 million in sales in the current financial year, which ends on February 28th.
Along with openings at Dundrum and Swords, this would help Hughes & Hughes achieve revenue of about €60 million - almost double the figure for the year to the end of February 2007 and about 50 per cent ahead of last year's performance.
Hughes is pencilling in earnings before interest, tax, depreciation and amortisation (Ebitda) of more than €5 million for this year, compared with €3.2 million for the 12 months to the end of February 2008, and €1.5 million in the year prior to that.
Hughes hopes the T5 shops will be a good calling card as the retailer pitches for contracts with other international airports. It already has shops at Dublin, Cork, Shannon and London City. "Terminal 5 is the launch pad we were looking for. It's a great coup for us, and we see opportunities at UK and other international airports."
Hughes & Hughes, which operates 25 shops, is a cash-hungry business. Hughes estimates that about €1.6 million has been spent on the T5 shops in advance of their March 27th opening.
Last October it spent €1.5 million building a 25,000 sq ft central warehousing facility in Finglas, and it has also put considerable resources into a new IT platform. Hughes said this has been funded by a mix of its own resources and bank debt.
Hughes (50) owns the business with his brother Gary, and said there were no plans to sell the business or seek external investment. Financiers suggest book retailers like Hughes & Hughes would probably attract a 10 times Ebitda multiple. This suggests a valuation of more than €50 million for Hughes & Hughes based on projections for the current year.
T5 will put the business on the map. If Hughes can weather the economic slowdown while continuing to expand the business it won't be long before someone comes knocking on his door.
