Multi-brand home shopping retailer Flying Brands will not meet profit targets despite total sales increasing over ten per cent to £6.4 million during the final quarter of 2010, according to a trading statement published today.
Like-for-like (LFL) sales fell from £5.7 million to £5 million year-on-year, as December’s severe weather disrupted the mail and online business’ deliveries.
Total revenues across all divisions were £6.6 million in Q4, down from £6.8 million in 2009, thanks in large part to the selling off of its Benham brand which accounted for £900,000 million in sales in last year’s results.
A statement issued by Flying Brands read: “Fulfilment of our Christmas orders was severely disrupted by the worst of the severe weather conditions.
“In addition our products, being mainly perishable goods and particularly our highly seasonal Christmas flowers, suffered more than other products from delays in delivery, with the result that our level of refunds and replacements was six times higher than the levels of previous years and for which we had budgeted.
“As a result our sales for this important trading period were considerably below management expectations and our profits for the year will be materially below market expectations.”
This disappointing sales period follows Q3 results which reported sales rises if not anticipation of profits increases for the full-year, with the group undergoing major restructuring during the last 12 months or so.
With profits now unlikely to meet targets Flying Brands has warned that it may breach one of its banking covenants and as such agreed with its creditors to bring forward the repayment of part of its debt.
Flying Brands has also announced that it will increase its stake in Dealtastic Holdings Limited to 80 per cent and take full control of dealtastic.co.uk and promomachine.co.uk whilst taking on the staff of Click Marketing.
The retail group’s gift division saw the strongest improvement during the quarter with sales up from £3.6 million last year to £4.5 million.
Flying Flowers was the brand hit hardest by the heavy snow, with a likely £500,000 knocked off trade leading to total sales of just £3.3 million.
“Looking forward, we expect significant cost inflation in our businesses in 2011,” continued the statement.
“Particularly in the areas of paper prices and postage but we continue to believe that our value-for-money products make us well placed to do well at a time of pressure on consumers’ disposable income.
“We are also encouraged by the continued growth in our web sales, both as a percentage of overall sales and in absolute terms.”