“We have failed in some of our promises to our customers,” said Connect Group chairman Gary Kennedy, describing the company’s poor performance over the past year.
Preliminary results published by the owners of Smiths News revealed a 40.8% profit drop, an overall revenue decline of 3.8% and a 11.4% fall in Smiths News revenues.
Senior company figures blamed the downturn on the “flawed” attempt to combine its Tuffnells and Smiths News arms, a failure to find £5m of predicted cost savings, the rising cost of contractors, falling operating margins, the offloading of PassMyParcel and low sales of World Cup stickers.
Despite admitting that it currently has no comprehensive strategy, Kennedy said changes since the appointment of new group CEO Jos Opdeweegh in September “draw a line in the sand”.
These changes included the appointment of Smiths News CEO Jonathan Bunting, further senior appointments, re-separating Tuffnells and Smiths News’ operations, creating a “less bureaucratic” staff culture and signing a new contract with Frontline.
Discussing the future of Smiths News, Kennedy said it would have “a detailed strategic plan” completed by January.
Opdeweegh added there would be further operational cost cutting, new “more favourable” contracts with all its publishers within six months, and developed “new adjacent revenue streams”.
NFRN head of news Brian Murphy told RN: “The separation of Tuffnells and Smiths News is good news. These results are a reminder that news has a unique requirement that is already under pressure.
“The NFRN is committed to working with Smiths News on success in the news category, but this cannot continue by hiking carriage charges. It has to come by embracing our fantastic reach in new and meaningful ways.
NFRN vice-president Stuart Reddish added: “We look forward to hearing more about the opportunities and working together in developing extra profit streams for our members.”
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