Premier Direct still going back to black

Oct 16 2007 by Andrew Mernin, The Journal

NOVELTY and book seller Premier Direct has continued its move back into the black on the back of sweeping changes to the way the company is organised.

The South Tyneside business, which sells goods through a network of sales reps visiting offices and factories around the country, said yesterday it had made a pre-tax profit of £500,000 for the 12 months to July 2007 on sales of £21.2m.

This compares to losses of £3m (£4.1m under the accounting rules followed last year) the previous year on revenue of £25.5m (£23.1m under previous rules).

The company said it had traded profitably in its traditionally loss-making second half of the year and predicted further profits growth during this financial year.

The firm made an 11% improvement on last year in like-for-like sales and saw a 5% climb in sales per salesperson in the same period.

Chief executive Eric McClenaghan said the company had weathered a period of instability caused by a number of acquisitions made by the firm in recent years.

The business has struggled to turn a profit since buying Greenwich Direct and Laughing Gull in 2005 and Oriflame UK last year.

Mr McClenaghan said: “We went through a process of acquiring a number of businesses but we complicated the company and built a difficult structure.

“We grew our sales network but there were too many sales people covering the same area.

“A wide ranging review of the business in 2006 led to new recruitment structures, redefinition of the sales territories and restructuring of internal functions.

“This led to significant reduction in stock levels during the seasonally quieter second half and at the same time enhanced our product range to the benefit of both distributor network and our customers.” Last year Mr McClenaghan restructured the business, bringing the number of sales reps down from a peak of 700 to 488 and eliminating any overlap between the newly acquired networks.

The company also removed a layer of management and installed 18 business coordinators to manage the reps as well as selling goods themselves.

The business, headquartered on Simonside East Industrial Park in South Shields, reduced its debt by £500,000 to £6.1m in the last financial year and expects to further reduce its arrears by £1.7m this year.

Five months ago Christine Stobbs, who worked for auditors KPMG for 12 years, was appointed as the firm’s finance director and has helped transform the business into a profit-making enterprise.

She said: “I’ve noticed quite a big difference at the company since I first arrived here five months ago. It’s been a team effort with everybody working together and we’ve started to communicate more. Staff are more upbeat, we are in a stable position and on target for stable growth.”