NBA takes its toll on Parragon

The demise of the net book agreement has knocked Parragon, Britain's largest publisher of low-price books, off its perch as one of the country's fastest growing private firms.

Last week, Bristol-based Parragon made the first of a number of redundancies among its 350 staff at head office and in its sales force as it stops the wholesaling of other publishers' books to the likes of Woolworths, Tesco and Asda.

Instead, it is to focus on building the Parragon brand and has started a two-week, pounds 600,000 TV advertising campaign in a novel departure for a UK publisher.

"With the loss of the NBA, a lot of supermarkets have been demanding more aggressive terms, and it's far harder to make any money," said Guy Parr, Parragon's managing director.

In April, the firm ranked second only to mobile phone retailer Carphone Warehouse in the Independent on Sunday's annual review of the UK's fastest growing private companies.

The company was established just eight years ago, and sales were expected to reach more than pounds 60m this year, against pounds 42m in 1995, until the demise of the NBA took its toll.

Now projections have been scaled back to just pounds 50m, with a drop to pounds 35m expected next year, but much improved profitability as it promotes its own brand of gift books.

Parragon takes around a quarter of the pounds 200m-pounds 250m anuual gift book market. It hopes to expand that with Christmas offerings such as a pounds 4.99 hardback on top-selling rock band Oasis, which features in the TV campaign.

Apart from supermarkets, Parragon already sells into John Menzies and has recently landed WH Smith, though up-market chains such as Waterstones and Dillons have been tougher to crack.

Venture capitalists 3i invested pounds 1m for a 10 per cent stake two and a half years ago, but a flotation is not on the cards in the short term as Mr Parr reshapes the business.