Waterford Wedgwood, the luxury goods company, has warned it may have to cut jobs after experiencing a slump in sales since the start of the year.
Redmond O'Donoghue, the chief executive of the group which bought Royal Doulton for £40m earlier this year, warned that annual profits will miss expectations and that the company was being forced to cut costs to improve profitability.
"The demand for our type of products is softer than it has been. Although we are still maintaining our leading market share, the size of the sector is falling. In this position, we have to accept that our sales will be lower than we would have hoped and instead attack our fixed cost base," he said, adding that job losses were possible.
Sales for the year ending 31 March 2005 are expected to be 6 per cent down on the previous year. Despite a relatively strong performance in November and December, when sales reversed their decline, January and February have been disappointing months for the group, with sales down 11 per cent on the same period in 2004.
"We thought in November and December that we may be seeing the first green shoots of a recovery. But since the New Year, sales have been disappointing," Mr O'Donoghue said.
Profit margins have also been hit and shares in Waterford, chaired by Sir Anthony O'Reilly, Independent News & Media's chairman, closed 4 per cent down at€0.042 (£.029). The anticipated cost savings from the Royal Doulton takeover, however, are on track. This takeover saved production of Royal Doulton goods in its historic Staffordshire heartland.
Royal Doulton, before the Waterford takeover, planned to transfer all its production to Asia. The goods produced at its Stoke plant have now been transferred to Wedgwood's factory in the area - a move Mr O'Donoghue said has helped safeguard its future.
The group has also successfully cut back on expensive inventory and has reduced its product lines by 64 per cent to streamline the business.
Last week, Paul d'Alton, Waterford's finance director, left the business to join AgCert International, a greenhouse gas-reduction company.Reuse content