Bill Gleeson: I was wrong about Littlewoods

Mar 5 2008 by Bill Gleeson, Liverpool Daily Post

IT’S worse than I feared. In last week’s column, I tentatively suggested that the reason Littlewoods Shop Direct was being so coy about its latest trading results was that the figures were poor.

Now the figures have been published at Companies House, I can reveal that it turns out that I was wrong.

They weren’t poor – they were utterly dreadful.

The Speke-based company’s trading position is moving backwards.

Turnover is down 12.5%, or £250m, a precipitous drop that surely is enough to induce a touch of vertigo in the most seasoned observers.

As well as poor sales, the bottom line has moved into the red.

In the year to April, 2007, the company showed a loss before interest and tax of £24.2m compared to a profit of £12.4m a year earlier.

At the retained profit line, Littlewoods lost £50m. Ouch.

It’s not that anybody thought the print market wasn’t declining, but the pace is frightening.

Littlewoods’ presentation was all about how it now sees itself as a dotcom, a modern internet-based business whose future is no longer dependent on the old-fashioned and diminishing print catalogue market.

The company predicts online sales will form a bigger proportion of its sales than print by this time next year.

But what is the point of that if you’re not making a profit?

And things don’t look like they are going to get better quickly.

There has been significant investment in IT and distribution systems, the costs of which are going to have to be depreciated and amortised for years to come.

At the moment, Littlewoods shares one particularly disturbing characteristic of the typical dotcom: it’s burning cash as it invests in its IT and marketing.

It’s not a sustainable position.

Things need to change quickly. Let’s hope the next set of results, out in a few months’ time, shows a marked improvement.

Otherwise, it’s going to have to go back to the Barclay family to ask for more capital to support it.

AND now a tale of two telecom companies. Yesterday morning, my wife had cause to phone BT to sort out a mess they had made with our account.

They had put us on the wrong tariff.

It took about three minutes to get through an elaborate automated answering system offering a bewildering array of buttons to press and another ten minutes before the phone was answered by a woman in India.

The line was poor, crackling so much it was too difficult to talk, and the Indian call centre woman gave up and put the phone down.

Second time round, it took 16 minutes to get through.

BT did sort out our problem later that day, but that was one month after the initial, not very complicated complaint.

How is it possible for a telecoms company to answer the phone so very badly?

In contrast, I had cause to call Vodafone yesterday, too.

It took them about 15 seconds before a human answered the call. He then took less than two minutes to sort out my problem.

Nor is it the first time BT has given me cause for concern in recent weeks.

I’m looking at broadband packages and when I speak to BT I get the impression their people don’t fully understand the range of tariffs on offer.

Virgin Media’s sales staff, in contrast, are on top of their subject.

And not to mention that Virgin’s tariffs appear better value.

It’s enough to make me worry for the future of the company, or could it be that the old utility monopolies still have it too easy?