The Bookseller.com

9th January 2009

Premier Direct forced to raise cash

30.01.08 Philip Jones

Workplace books and gifts seller Premier Direct has been forced to raise extra finance after over-buying stock at Christmas. Premier Direct said that it currently holds about £1.5m of non-seasonal stock more than it requires after festive sales failed to respond to a new group sales initiative and a new IT system "generated misleading information".

In an announcement put out this morning, Premier Direct said that in order to meet the group's short-term financing requirements, the company had secured new additional short-term bank financing of £1m. This will be repaid after the group raises £1.15m via a placing of shares on the stock market, with some £430,000 worth of shares expected to be bought by the directors and senior management.

Premier Direct said that it had considered other methods to raise the necessary funds but that taking account of "time constraints and transaction costs", the proposed placing was the most appropriate method of raising the required capital.

The company said that the decision to increase the number of sales cycles before Christmas 2007 increased revenue but that the improvement was "lower than anticipated". It added that an IT system installed in the early summer of 2007 "generated misleading information as to active distributor numbers, which directly led to an over purchasing of stock".

Despite the issues relating to stock and the pre-Christmas sales cycles, Premier Direct said that it expected to be able to report pretax profits for the six months to 31st January 2008 ahead of the comparable period last year, with sales revenues of not less than £10.6m.

Premier direct sells books, toys and gifts into workplaces, and also operates a cosmetics company called Oriflame. Books represent around 30% of its turnover.

Financial Philip Jones Premier Direct

Comments on this article