Signs of recovery at Appreciate, which ponders future of hampers business
While financials may be down on last year, Liverpool-based rewards vouchers to Christmas Hampers group, Appreciate, sees signs of trading returning to improved levels, it said in today’s annual results announcement, which also revealed plans to cease the production of hampers.
The business signed a new revolving credit facility with Santander UK worth £15m on Monday this week, which was followed yesterday by the completion of the sale of the land and buildings at its former Valley Road headquarters in Birkenhead for £3.2m in cash, through the disposal of group subsidiary, Budworth Properties.
Today’s figures showed that billings for the year to March 31, were £419.857m, down from £426.901m.
Billings represents the value of goods and services shipped and invoiced to customers during the year and is recorded net of VAT, rebates and discounts. It is an alternative performance measure, which the directors believe provides a more meaningful measure of the level of activity of the group than revenue.
Revenues of £112.724m compared with £110.394m the previous year.
Pre-tax profits of £7.7m were down from £11.304m in 2019.
The group said today that trading for the 11 month period to the end of February was in line with expectations, with the final month of the financial year impacted by the COVID-19 lockdown.
Total cash balances, including monies held in trust and deposits, stood at £132.3m, compared with £134m last year.
The board has decided not to recommend a final dividend given the continued short-term uncertainty from COVID-19. The board said it intends to return to its dividend policy as soon as it is prudent to do so.
However, the board said that COVID-19 has led to an acceleration in the appeal of digital products that will support its future plans.
It prioritised digital offerings to support customers through the pandemic by adding e-codes and e-cards to its proposition on highstreetvouchers.com.
Since the end of the reporting period, total billings have progressively recovered as lockdown eases, but were 48% down as at the end of the first quarter in the new financial year compared with the same period in the prior year.
Today’s announcement said proposals have been made to cease production of its Christmas hampers, for so long a staple of the group, while, with an eye firmly on the future, new digital products have been launched and tested.
Christmas hampers were the basis of the business, then known as Park Foods, when founder Peter Johnson moved the family butchery business into a Christmas savings club in 1967.
But over the past few years it has continually declined, as big supermarket and online shopping – both non-existent in Park’s early days – has grown in popularity.
The hampers business now represents just two per cent of total billings, while its operating profit of £6.6m is a small contribution to the group.
If it is decided to close the division, probably towards the end of next month, no hampers will be sent this Christmas.
The decision could also result in up to 42 jobs losses, and consultations with the affected staff have now commenced.
Appreciate now focuses on three lines of business: Gifting, through cards; engagement, which is a B2B function allowing companies to reward staff or customers through gift cards; and pre-payment, which is an option to continue helping its hampers customers save for their Christmas treats.
This would provide them with a card or code to use at a supermarket or retailer to make their purchases.
Chief executive Ian O’Doherty said: “We’ve made significant progress in implementing our strategy to adapt our business for the future.
“Our focus on digital products and delivery has intensified, and we’ve accelerated our development of smarter, more efficient ways of working. This will position us well for doing business after COVID-19.
“Our continued investment in transformation, with changes to logistics and operations completed, is already showing significant benefits.
“Whilst our performance has been interrupted by the lockdown, we have seen trading start to recover and expect the resumption of growth founded on the more robust and scalable business model.”
He added: “We are confident that delivery of the strategic business plan will be the bedrock of strong and sustained future growth.”