The redundancies are part of a bid to placate shareholders, who have seen their investment collapse just months after founder Stephen Boler netted pounds 60m from the flotation. Limelight also spelt out a list of management actions to put the company back on track.
Speaking after the company announced increased profits for the year to December, Ashley Lewis, finance director, said there was no question of either Cazenove, Limelight's broker, or its sponsor, NM Rothschild, resigning over the affair. The collapse of the share price, from a peak of 200p shortly after a placing at 175p to yesterday's 94.5p, comes as a serious embarrassment to the two blue-chip firms.
Mr Lewis said sales had dropped dramatically in January after buoyant sales in the run-up to Christmas. He could think of no substantive reason for the fall-off in demand, except that potential windfalls from a raft of building society flotations had locked up the money that might otherwise have been spent on big ticket items such as fitted kitchens, bathrooms and conservatories.
In the year to December Limelight bounced back into the black, reporting pre-tax profits of pounds 2.84m compared with a pounds 1m loss in 1995. The profit was struck from sales of pounds 171.6m, up from pounds 133.9m the previous year. As projected at the time of flotation, there was no dividend.
Mr Lewis said Limelight was investigating outsourcing various internal functions such as warehousing and distribution in order to cut costs. He said the company was also planning to sell other new but related products through its showrooms including kitchen stools, towels and rattan furniture, and to contract manufacture for an unnamed national distributor.