Flying Flowers stops wilting

FLYING FLOWERS, the Jersey-based florist by post must be in the running for worst performing share of the year after a vertiginous fall in the third quarter, which saw the shares slump from 592p to 130p.

Yesterday, the chairman, Walter Goldsmith, a former director general of the Institute of Directors, issued a reassuring statement, indicating that pre-Christmas trading, which accounts for 30-40 per cent of annual sales of fresh flowers was "satisfactory despite the current difficult retail climate".

He was rewarded with a rebound which saw the shares close 17p higher on the day at 187.5p.

The company's growing database now contains a million names of people, mostly women over 45, who get a mailshot four or five times a year. The comparatively modest price of a purchase - around pounds 12.50 including delivery charge - seems to be doing the trick at a time when spending on big-ticket items has been wilting.

Over-ambitious spending on building up stock and on marketing at Gardening Direct, which supplies bedding plants, has been trimmed back to realistic levels, after triggering a summer profits warning.

Stanley Gibbons, the stamp dealer acquired in April, is also bedding in nicely with Benham, the existing business which supplies limited edition first day covers.

But the trump card played by the chairman yesterday is a reorganisation of the businesses to provide more central control and exploit the synergies between them. For the first time a finance director has been appointed. David Harbord has been brought in from a subsidiary of AB Foods and will also take charge of information technology and personnel. An operations director has been appointed, and a specialist consultant in business strategy has been brought in as a non-executive.

Wrapped up in the statement was a warning that the accounts for the year to 2 January will include reorganisation costs of pounds 450,000, but excluding exceptionals the company is still on course to meet the reduced profits of pounds 5m signalled in the last trading statement.

In the last two years the group has invested pounds 6m-pounds 7m in another two-acre glasshouse in Jersey, a new call-centre in Essex and a new venture in the US, building up some significant borrowings, but interest costs are falling fast and the business is still cash-generative.

Analysts had already scaled back their forecasts to pounds 5m-pounds 5.5m and earnings of 15p-17p in the year just coming to an end, rising to pounds 6m-pounds 6.5m and 17p-18p next year, when the millennium celebrations could spawn a rash of commemorative covers and floral exhibitions. At just 10 times forward earnings the shares are realistically priced.