The Scottish entrepreneur Sir Tom Hunter has slammed the management team at Flying Brands for their inaccurate forecasts and threatened to become a “more active” investor, following a profits warning from the home shopping group yesterday.
Jersey-based Flying Brands, in which Sir Tom’s investment vehicle West Coast Capital owns a 29.9 per cent stake, said its full-year profit expectations would be £1.4m, which is £0.5m lower than expected – sparking a furious response.
A West Coast Capital spokesman said: “As late as last week, we were told categorically by the [Flying Brands] management team the business was on target to meet its profits forecasts of £1.9m only to find today it is not – being out by £0.5m is not great forecasting.”
He added: “Last year, we attempted to acquire this business citing its need to significantly restructure; today we see why.” West Coast Capital walked away from takeover talks in November.
Flying Brands – whose portfolio includes Flying Flowers, the flower delivery arm and Gardening Direct, the mail order business for gardening products – blamed the decline on customers switching to lower margin flowers and higherthan expected delivery costs, but declined to comment on Sir Tom’s broadside.
Sir Tom’s investment portfolio has taken a pounding during the credit crunch. Last month, West Coast Capital bought its young fashion chain, USC, out of administration, shedding 15 unprofitable stores. Last month, Sir Tom – who last year pledged to give £1bn to charitable causes over his lifetime – was also forced to hand over a large chunk of his stake in Wyevale, the garden centre labouring under hefty debts, in a debt-for-equity swap with HBOS.
The West Coast Capital spokesman said: “We will not now stand back and see the value in this business [Flying Brands] further eroded for us and all other shareholders.” It is understood that West Coast will initially talk to the company about restructuring its operations, including reducing supply chain costs.
However, as a last resort, Sir Tom may call for an extraordinary general meeting where shareholders will be asked to vote on whether to remove some or all of Flying Brands’ board.
Flying Brands said it continues to pay down its debt on schedule. Its gross cash balance was £2.3m at the year end with banks loans of £5.2m.Reuse content