Flying Brands, the company behind multichannel brands from Flying Flowers to Gardening Direct, today warned that profits would be “materially below market expectations” in the face of weak consumer confidence.
The company said, in a trading statement issued today, that overall orders across the group were marginally ahead of the same period last year, from January 1 to April 1, at £10.8m in 2011 compared to £10.7m last time. However, like-for-like sales were 19.8% below last year’s.
As a result, profits would be lower than expected and the company would soon be starting talks with its lenders in order to renegotiate banking arrangements. At the time of writing the company's share price had fallen by 7p, or 17.5%, to 33p.
Flying Brands sells online and through catalogues and press adverts, with key divisions focused on flowers and gardens. Its Dealtastic site, currently in its early stages, offers deals of the day.
In the last year the company has focused on its garden and gifts market, acquiring new businesses such as Flowers Direct and selling entertainment businesses. Its strategy also focuses on putting the internet at the centre of its business while maintaining its long-term mail order customers.
“Overall,” said today's statement, “we believe that our strategy for transforming our business remains the right one but the continuing under performance in the traditional flowers business and the recent decline in our bird food business means profits for this year will be materially below market expectations.”
In its flowers and gifts division, orders in the first quarter of the year rose to £3.4m from £2.3m last time, but were 14.7% down on a like-for-like basis, which strips out the contribution of new businesses including its Flowers Direct and Drake Algar businesses.
“Our direct-to-consumer businesses have been impacted, like many retailers, by weak consumer confidence,” it said. Mother’s Day trading was “particularly difficult,” while competition was increasing and existing rivals were discounting.
Meanwhile, in the gardens division, orders to April 1 were 33.5% down on the same time last year.