Hunter talks tough as Flying Brands delivers a fresh investment blow

Published on Wednesday 21 January 2009 20:56

Sir Tom Hunter has a near 30% stake in mail order flowers firm Flying Brands. 'We will not now stand back,' his spokesman said

CREDIT-CRUNCH-HIT tycoon Sir Tom Hunter has promised to become a more active shareholder in a mail order flowers firm in which he has a near 30 per cent stake after it issued a stark profits warning.

Hunter is set to demand a detailed plan to restructure Flying Brands, which yesterday said full-year profits were likely to be 500,000 down on expectations, at about 1.4 million.

The profits warning at the Jersey-based flowers and gardening mail order firm is another blow for the tycoon who has suffered a string of setbacks in recent months.

The entrepreneur last year abandoned his plans to take over Flying Brands after failing to agree on a price for the company. Ewan Hunter, spokesman for Sir Tom's West Coast Capital (WCC) investment vehicle, said: "Last year we attempted to acquire this business, citing its need to significantly restructure. Today we see why.

"As late as last week we were told categorically by the management team the business was on target to meet its forecasts, only to find today it was not."

He added: "We will not now stand back and see the value in this business further eroded."

It is understood that WCC intends to tackle Flying Brands' board to demand swift action – and could even call an emergency general meeting of shareholders.

Ewan Hunter added that WCC would "always look at options", but refused to comment on whether it was likely to put in anther bid for Flying Brands. Under Takeover Panel regulations, WCC is not allowed to make another approach to the firm for six months after its last pitch.

Flying Brands refused to comment on a potential restructuring of the company, but pointed out that it had announced plans to ditch its cards business, Greetings Direct, and appointed a new chief executive in June.

The company said that the predicted fall in profits was due to cash-strapped customers of its flower delivery operation, Flying Flowers, switching to lower- margin products, combined with higher costs. It added that like- for-like sales for the final quarter of last year – excluding those attributable to Greetings Direct – were flat compared with 2007.

Flower delivery sales were 0.6 per cent up against the comparable period and the company's other brands were collectively 1.2 per cent down. Flying Brands' gross cash balance stood at 2.3m at the end of the year, with bank loans of 5.2m.

Sir Tom's USC clothing chain was placed into administration in December, with the majority of stores then bought back by another company he owns.

He has also reduced his 40 per cent stake in Wyevale Garden Centres to 25 per cent and written off 35m in Crest Nicholson, reflecting the fall in value of his stake in the house builder.