Premier Direct snaps up book business WBC.
Byline: By Iain LaingGift retailer Premier Direct doubled its size yesterday by snapping up a book business from its rival at a bargain price.
The Tyneside company bought retail business The Wonderful Book Company and took on the Nottingham-based operation's 300-strong network of sales people.
It paid just pounds 4.1m to home shopping giant Kleeneze for the business the group had bought for pounds 31.5m less than three years ago.
Kleeneze admitted the price was "disappointing." But WBC had not sat well with its catalogue-based business and its direct marketing division amassed pounds 10m operating losses and halved in size since Kleeneze took over.
But South Shields-based Premier Direct, which has bounced back from heavy losses, sees massive potential in its first big acquisition.
Chief executive Barry Moat said: "We are very pleased. Overnight we have doubled our turnover and doubled our distribution network. We are the biggest company of our kind in the UK."
WBC's turnover had dropped from pounds 40m to pounds 20m and lost half its network of sales distributors in the three years it was in Kleeneze's hands.
Both Premier and WBC specialise in selling discounted goods on visits to offices, schools and hospitals and the acquisition adds hugely to Premier's product range, buying power and client base. Premier is buying the assets and products, not the debts.
Mr Moat said that he hoped to take WBC's turnover back up to its former level within a year, recruiting large numbers of sales staff nationwide as he does so.
He believes that Premier's network of sales people, currently numbering 350, combined with WBC's could be grown to 1,000-strong if business continued to grow at its current rate.
"This is a big step change for Premier Direct. We expect it to start earning us money immediately and will allow us to realise the full potential of a very strong market," added Mr Moat.
The company, which won brief national fame distributing the Big Mouth Billy Bass toy which became so popular even the Queen had one, slipped after its business was hit by the floods and petrol crisis in late 2000.
It lost 80 staff, profits sank around 70pc and its share price plunged from 470p to 82p. Last year losses were still high at pounds 700,000.
But earlier this year the company, formed by a management buy-out in 1997, posted a 116pc rise in profit to pounds 504,000 on turnover of pounds 14.8m.
Meanwhile, Kleeneze chief executive William Rollason said the sale cleared the way for the group to concentrate on its profitable Kleeneze and Farepak businesses. While the group's remaining businesses made operating profits of pounds 8.5m in the year to April 30, up 20pc, the direct marketing division, including WBC, ran up losses of pounds 10.8m and after a pounds 33.4m goodwill writedown on the value of DMG, the business made pre-tax losses of pounds 44.2m.
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| Title Annotation: | Features |
|---|---|
| Publication: | The Journal (Newcastle, England) |
| Date: | Jul 26, 2003 |
| Words: | 492 |
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