Flying Brands' gardening arm reports slightly lower sales

Online retailer Flying Brands' garden division reported sales of £11.06m for the 26 weeks ending 2 July 2010, compared to £11.25m for the same period last year.

Operating profit was £1.73m compared to £2.19m last year.

A company representative said: "Sales in our core Gardening Direct business were flat compared to last year as a result of our having made up the shortfall that we reported earlier in the season. Contribution margin in this business was affected by a significant increase in fuel costs, partly as a result of an increase in the price of oil compared to last year and partly as a result of the need to use more fuel because of the colder weather during the crucial stages of growing our small plants and also saw an increase in over 10% in postal delivery costs.

The company also invested in a customer acquisition programme.

"We also made the decision to continue to invest heavily in customer recruitment in Gardening Direct and in our new brand Jersey Bedding Plants. We recruited 74,000 new gardening customers (2009: 52,000) and our active database for gardening now stands at 333,000 compared to 299,000 in 2009.

"Sales and contribution in Gardening Direct were also affected by crop failure during a period of stormy weather."

The spokesman said these interirm results could improve. "We are currently in dispute with our insurers as to whether or not these losses are covered by our insurance policy. If we were successful in this claim this would result in a material improvement in the financial performance of Gardening Direct."

Internet sales for this brand increased from £1.74m to £2.16m and now account for 25.5% of all sales (2009: 19.4%).

Sales in Garden Bird Supplies (GBS) declined from £2.27m in 2009 to £2.13m but profitability doubled from £0.21m to £0.38m as the company reduced the number of customer mailings and recruitment activity in the first half. The number of active customers declined from 42,000 to 39,000 and "improving the performance of this brand will be one of our priorities in the second half of the year" Internet sales grew for this brand and these now account for a third of all sales.

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