The Investment column: Some cheer from Park

Peter Johnson, Park Food's executive chairman and 70 per cent shareholder, has had a bad year. Last March his group was forced to make a profits warning after its promotional marketing operation, now called HSL, took its eye off the ball.

That was followed up by the failure of talks between HSL's founder, Stuart Marks, and Mr Johnson for a takeover of the whole group. Mr Marks and two of his fellow HSL directors were ousted in October, but Mr Johnson's troubles did not end there: Everton, which he also chairs and controls, has just racked up five defeats in a row.

Yesterday, however, he had something to cheer about, when Park reported a pre-tax deficit cut from pounds 5.71m to pounds 5.23m in the traditionally loss- making first half to September. The shares, down from a 1994 peak of 140p, ended 5.5p ahead at 55p.

The better sentiment had less to do with the figures and more with the prospects. Park's main business of Christmas hampers, paid for through weekly savings schemes, is about as seasonal as you can get, but the latest season was a good one. Sales of hampers and Park's high street gift vouchers operation recovered to over pounds 100m from pounds 94m the previous year, when the business was hit by the National Lottery. Cash deposits by customers peaked at a record pounds 80m in November and the omens are for more of the same. Based on orders taken since November, turnover is on course for another 6 to 7 per cent rise this Christmas.

Park's expertise is in wringing more from its existing 1 million-strong customer base than any growth in the market. The average weekly spend has gone up from pounds 4 to about pounds 5, but the spice should come from newer businesses. HSL, for which Park paid pounds 9.3m in 1993, has not proved a good buy, although it appears to be on the mend. Analysts expect full- year profits of pounds 1m, up from pounds 330,000 last time, but half the level of two years ago.

More risky is the venture into reconstituted flavoured chips, DJ Spuddles Gourmet Fries, to be launched next week when a new plant opens. Mr Johnson is confident that pounds 4m investment will contribute next year, but it is anyone's guess how much.

Granville Davies is looking for Park to produce same-again profits of pounds 9.5m this year, for a forward multiple of 14. High enough.