In a trading statement released today (17 December), the PLC said that sales at its £167m turnover Marketing Activation division – which includes SP, Service Graphics, Tactical Solutions and St Ives Management Services (SIMS) – were down 10% compared with the prior year in the four months to the end of November, primarily because of a fall-off in business at the £73.5m SP Group operation.
“We are not seeing the level of Christmas activity we would expect at this time of year, in those businesses that generally experience a seasonal uplift,” said chief executive Matt Armitage.
“It will be interesting to see how general retail has fared. Christmas trading generally seems a bit soft,” he added.
The grocery business overall is in a period of intense price pressure. SP’s major retail customers are Marks & Spencer and Sainsbury’s, and the group also does some work for Asda. These clients account for around 35-40% of its sales, Armitage said.
It has, however, managed to maintain margins in Marketing Activation through cost reductions and improved efficiency.
“Outside of grocery, general trading is buoyant. Our diversification plan is geared around spreading the risk around SP to other brands and retailers, and other markets such as leisure and travel,” he stated. “We are also driving the SIMS proposition into a broader market beyond retail.”
St Ives said diversification of the SP client base “remains a priority”.
Revenues at £66.9m turnover book printing wing Clays were also 3% down on the prior year during the period. “We are not seeing any of those very large titles that consumers flock to this year,” Armitage said.
However, Clays is set to benefit from a significant boost in work in the New Year, when the Penguin Random House paperback work transitions to the factory. This is the largest part of the huge contract St Ives won from CPI at the beginning of this year.
In contrast, St Ives said that trading at its burgeoning £110.7m turnover Strategic Marketing segment was “strong and significantly ahead” of 2014 on the back of organic growth of 15% and 20 latest acquisitions in the space. It said that group sales overall were 4% up and that its expectations for the full year “remain unchanged”.
St Ives had sales of £344.6m in the year to 31 July. Its share price was unchanged at 215.5p following the trading statement.
Separately, St Ives SIMS has parted company with sales director Andrew Clay (pictured below). He had worked at St Ives for 40 years, in a variety of roles across the group.
Clay has departed as a result of a restructure at SIMS, but will not officially leave until next autumn and will work on a number of projects in the meantime. He retains his role as non-executive chairman of Clays, which was founded by one of his ancestors more than 200 years ago.
