Clinton Cards surprised a few people today by revealing that it’s pulling the plug on Birthdays (and Thorpalm Greetings Cards, another subsidiary) in the face of mounting red ink. Despite a recent refinancing, Clintons said that it couldn't afford to sustain a business that's currently losing about £7m a year, particularly since it’s still not seeing many signs of life on the high street. Birthdays will keep trading while administrator Zolfo Cooper weighs up its options, but today’s move means that its 2,000 staff are in serious danger of losing their jobs. And being surrounded by Deepest Sympathy cards probably won’t help the mood.
When Clinton Cards spent £46m on the Bury-based Birthdays chain in 2004, giving it a 21% share of the UK greeting card market, it claimed the deal would be earnings-enhancing within two years. However, things didn’t really go according to plan: Birthdays was losing money almost from day one, and the onset of the recession hasn’t exactly helped sales: apparently half of its shops are now loss-making. Clintons said it had been pumping in cash to keep Birthdays afloat - and that recent refinancing has put its own books in reasonable order - but in the current climate, it couldn’t afford to keep a business that was losing so much money ‘with limited opportunity to improve on that performance in the foreseeable future’.
Clintons itself has been finding life a lot more difficult recently (in these troubled times, there are bound to be fewer people buying pointless helium balloons). It said today that group-wide like-for-like sales, i.e. stripping out new retail space, were basically flat last quarter. In some respects this could have been worse - although interestingly, it was largely due to a surprise sales boost at Birthdays; sales at Clintons' own stores were marginally down on this time last year. Nonetheless, today’s news has gone down well with investors: Clintons’ share price has already jumped by about 40% in recent months, and confirmation that the Birthdays monkey is off its back pushed the stock up by another 30% this morning. As a result, the company’s now worth £10m more than it was last night.
Birthdays’ poor employees are likely to be rather less happy, however; they can only hope that the chain’s various high street locations will tempt a turnaround buyer. So in the circumstances, it’s rather unfortunate that its homepage currently reads: ‘Are you looking for a job in Retail? Check out our new Jobs section on this Website and you'll find some great opportunities to join our friendly sales team’. Oh dear...
In today's bulletin:
CBI tags Gordon Brown as an economic vandal
Unhappy Birthdays for Clinton Cards
P&G claim that Pringles 'not a crisp' takes VAT-man's cake
Poor people skills destroy merger values
Trader's boozy bet results in two-year FSA ban