Poor profits, terrible excuses

News Analysis: It was the World Cup. It was the weather. It was the slump in three-dimensional jigsaws. Firms always find something to blame
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The Independent Online
EXCUSES, EXCUSES. While British Rail with its "wrong kind of leaves" may have passed into history, British businesses are achieving new peaks of productivity in inventing excuses for poor profits.

While strong sterling and Asian flu are the main bogeymen of corporate Britain, both Kunick, the slot machine manufacturer and leasing company, and Rank, the leisure group, yesterday blamed the World Cup for poor recent sales.

Kunick yesterday issued a profits warning claiming the World Cup had kept gamblers out of pubs or glued to the television screens.

Kunick, which operates 40,000 machines in the UK, said the tournament had a "significant impact" on its income, wiping out 22 per cent of its takings. The total cost to its profits would be around pounds 700,000, it said.

Russell Smith, Kunick's chief executive said: "A lot of pubs brought in big screens for the tournament and, with the matches being shown in prime drinking time, people watched TV rather than play on our machines.

"It had an amazing effect. We have never seen anything like it before."

Andrew Teare, Rank's chief executive, said yesterday that the Odeon chain suffered a drop in attendance in the second quarter because of the World Cup.

Echoing Mr Smith, Mr Teare said that punters preferred footy to films during the four-week tournament.

The pub group JD Wetherspoon also recently blamed the World Cup for a 10 per cent fall in beer sales during June.

Perversely, this was because Wetherspoon pursues the praiseworthy strategy of being "friendlier" than other pub chains, by banning intrusive television and canned music from its premises. Sadly this proved a turnoff for punters during the tournament.

To be fair, JD Wetherspoon has always been up-front in expecting poor sales during the World Cup, a four-week period every four years.

Jim Clarke, finance director, said in June: "We knew things were going to be tough, and they've been as difficult as we expected.

"It's something we knew was coming and now it's finished. Everything else is exactly in line with expectations."

Returning to this week, Roger Elmhirst, chairman of Zotefoams, blamed the strong pound for a slowdown in profits this year, as well as "a slowdown in supply to the three-dimensional jigsaw puzzle manufacturers".

The Croydon-based plastics manufacturer supplies foam to big toy makers like Hasbro, which use it to make giant puzzles, including a four-foot high Big Ben and a giant plastic Notre Dame.

Not to be outdone in the excuse stakes, Albert Fisher, the struggling fresh produce, food processing and seafood group, announced half year losses of pounds 23m in April due to the strong pound, a failed sale of its seafood operations - and El Nino, the global weather phenomenon.

It went even better last month when it announced more woe and pinned part of the blame on a 25 per cent fall in the pea harvest.

A spokesman for Albert Fisher said then: "We estimated a crop of around 32,000 tonnes but have seen that fall by a quarter."

Most of Albert Fisher's peas are grown in Lincolnshire and East Anglia, he said. "It's been wet, it's been damp and there has been no sun. The peas have not been as prolific as we had hoped."

Albert Fisher has been plagued by such misfortunes. A harsh winter destroyed Dutch cockle beds in the winter of 1996-7.

The company's finances were further buffeted by a glut of lettuces in California.

Coincidentally, one of the last serious bidders for the Albert Fisher business was Andrew Regan, just before he came a cropper last year trying to buy the Co-operative Wholesale Society.

When it comes to excuses, though, it is hard to beat old pros like Sir Graham Kirkham, chief executive of DFS, the furniture chain. Sir Graham managed to raise eyebrows even in the cynical City in June, when he had to announce the first fall in profits at the group in 28 years.

He blamed high interest rates, the hot weather in August last year, the death of Diana, Princess of Wales, the deadline for self-assessment tax forms on 31 January, and finally, Easter flooding.

You might have thought the abstract world of derivatives would be immune from such considerations, but Liffe, the London futures market, still managed to get in on the act yesterday.

John Foyle, Liffe's acting chief executive, warned that "July is traditionally a quiet month during the summer holiday period."

Are Liffe's German rivals on the Deutsche Terminborse (now renamed Eurex) all sunning themselves on the beach? Or are the Teutonic hordes beavering away, extending their lead over London in the crucial Bund contract market?

And, come to think of it, what is the German for "wrong kind of leaves"?

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