Christmas hamper savings firm warns on profits

Park Group, the Merseyside financial products to Christmas hampers business, said it has traded ahead of expectations, in an update on its financial performance for the year to March 31, today.

However, it warned that pre-tax profits will be below target due to new accounting standards.

Today’s statement said group trading for the year was ahead of expectations, despite the impact of an additional £500,000 of costs relating to investment in the new strategic business plan that was outlined at the time of the half year results.

It said this was driven by a strong performance from the corporate business and a broadly stable performance from the consumer business, reflecting the evolving Christmas savings market.

But it added: “The particularly strong growth in our more profitable card business means that the financial impact of the new accounting standard IFRS15 is now expected to be approximately £500,000 higher than previously anticipated, as a greater proportion of profit will be deferred until the current year.

“Accordingly, despite the strong underlying trading performance, reported profit before tax – before exceptional items – is expected to be marginally below market expectations.”

These are currently a profit before tax of £12.9m on revenue of £112m.

However, today’s statement added that, having taken the decision to move to new offices in Liverpool, Park anticipates incurring an exceptional impairment charge of approximately £1.25m on the carrying value of its existing site in Birkenhead.

Looking ahead, the board anticipates the trends experienced in the year just ended will continue, with good growth in corporate business partially offset against a slower consumer Christmas savings market.

Additional costs, net of initial expected cost savings, of £2m associated with implementing the strategic business plan have been identified, which will be incurred during the current financial year.

These costs, which reflects both one off and ongoing costs, will relate to running two sites as Park transitions to the new offices, as well as additional technology and marketing investment.

The benefits of the changes are expected to accrue in subsequent financial years both in terms of directly enhancing profitability and in terms of positioning Park to continue developing and growing in its fast-moving sectors.

“Overall, the board, therefore, anticipates profitability will be lower in the current year before growth resumes thereafter,” it said.

The business said it has made good progress through the initial steps of its strategic business plan. It said, in relation to the four pillars of the strategy, specific actions include:

• Clarity: We have separated the hampers business, under a new discrete management team. We have invested in our people having appointed a chief transformation officer, to help execute the changes we are making, a new human resources director, and a new interim head of marketing.
• Experience: We continue to drive product and customer innovation, becoming an organisation anchored on digital. We have selected a new enterprise resource planning (ERP) system, Microsoft Dynamics, which provides scalability, resilience and efficiency.
• Productivity: We have signed a lease for our new offices in Liverpool city centre, which we believe will ensure an integrated working culture as well as retain and attract talented staff. We expect to move in during late Summer 2019.
• Appeal: We continue our work in relation to the launch of a new product, targeting currently untapped demand from a broader audience.

Chief executive Ian O’Doherty said: “Park delivered another good performance last year and, importantly, we put in place our new strategic business plan.

“We are beginning to make tangible progress delivering the initial steps of the plan, in terms of premises, people and digital investment.

“This investment is expected to result in enhanced growth prospects and a more robust business model, putting us in a much stronger position for the future.”

The group also announced today that Laura Carstensen has agreed to continue as non-executive chairman for another three years from June 3.

Ian O’Doherty said: “This is excellent news for Park. Laura has a thorough understanding of our business and has been instrumental in guiding us through a period of change.”

Laura Carstensen said: “I am delighted to continue as chairman of Park.

“Having announced a review of our business strategy last year we are now working hard to both grow the business we have and develop our business for the future in line with our refreshed strategic thinking.

“I am pleased to continue my involvement in this exciting process and I look forward to working with Ian, Tim and their strong executive team as we strive to deliver it.

“Our relocation later this year to new offices in Liverpool exemplifies our commitment to moving our business forward and our commitment to our fantastic Park people.”

Park will announce its final results for the financial year on Wednesday, June 12.