Alistair Houghton meets CHRIS HOUGHTON, Park Group managing director
CHRISTOPHER HOUGHTON doesn’t like to hear the F-word used around the office. The Park Group managing director says the sound of it makes him flinch.
The Birkenhead-based Christmas savings specialist Park last week reported strong half-year results and said sales for next year were already looking strong, reflecting a strong recovery from the collapse of Christmas savings rival Farepak two years ago, an event that was disastrous for the industry.
The collapse of Farepak is a problem which understandably annoys Houghton and the Park team, because not only is Park a strong business with no bank debts, but the company has been at the forefront of measures to restore confidence in the Christmas savings sector.
In the six months to September 30, its loss was reduced to £3.2m, compared to £3.9m in 2008. Park generally reports a loss in its first half as most of its sales come in the second half.
Orders for this Christmas were 15% up on last year, while revenues in its corporate incentive voucher business rose 10% and online revenues more than doubled. Park lifted its interim dividend 10% to 44p.
Park, says Houghton, is primed for still more growth as prudent shoppers in cash-strapped times look to savings clubs as an alternative to expensive and hard-to-obtain bank credit.
So it is unsurprising that Houghton dismisses any mention of Farepak with the wave of a hand.
“We’ve put them behind us,” he said. “It was a very difficult period of time and we don’t like to talk about them. They’re dead and gone.”
Park was founded in 1967 by Tranmere Rovers owner Peter Johnson, who still comes to work at Park every day in his role as chairman, and remains one of the region’s best-known businessmen. The group employs 250 people in Birkenhead, rising to 350 at peak periods.
Park began diversifying from hampers in the 1970s when it created vouchers that customers could redeem for turkeys at Dewhursts. It later teamed up with Woolworths for another voucher scheme, at which point Johnson decided to create a universal voucher. Mention Park Group and most people still think of Christmas hampers – even though they now account for just 5% of Park’s turnover.
Around 90% of sales at its Christmas savings business come from vouchers, whether the company’s own Love2shop range or those issued by High Street stores such as Marks & Spencer and sold by Park.
Love2shop boasts retail partners from Matalan and TJ Hughes to Halfords, Debenhams and House of Fraser.
It is the largest “multi-redemption” voucher of its kind in the UK.
Customers save either through a network of agents or directly. They pay every week for 45 weeks, with the average order now standing at £374.
Park customers and agents earn a commission on their savings, which Houghton says means they make returns similar to those they might make from a bank account.
Park has long since dispatched its orders for this Christmas, and is preparing for next Christmas and the festive season in 2010.
After this year’s sales rise, Houghton is confident more growth will follow.
“Christmas, 2009, orders are coming along well – above the same time last year,” he said. “That’s encouraging for us.”
Houghton was born in Northamptonshire but grew up in Wirral, where he still lives.
After training as an accountant, he worked at some of the biggest names in local business – Lever Brothers, Littlewoods Pools and Littlewoods Stores – and at Boots in Nottingham.
He joined Park in 1986, rising through the ranks before becoming finance director in 1986 and managing director in 2004.
Houghton, a member of the CBI’s regional council, is proud that the business remains free of bank debt thanks to its strong cash stockpile. In the last half-year, its cash balance peaked at £124m – up from £95.8m in 2007.
It also earns money on those balances – in the half-year, its interest income rose 41% to £1.8m, though that growth will slow as lower rates take effect.
“The strength of this business is that the cash position is strong,” said Houghton.
“The business has got no bank borrowing, so we’re not exposed to the credit crunch as such.
“I wouldn’t like to be struggling to get debt funding from the bank at the moment.”
As the banking crisis means credit is becoming harder to obtain, and disposable incomes are shrinking, Houghton believes that Park’s simple savings technique could help it win more new converts.
He said: “In the current climate, it makes sense for everybody to be a bit prudent and save for Christmas and avoid having to ask for credit which may not be available.
“We believe there are around 16m homes in our demographic. Not everyone will want to put cash away for Christmas, but there is scope there.
“The internet makes it easier for people to deal with us and spreads our geographical reach.”
HOUGHTON describes Park’s plans as “disciplined savings plans”, which allow people to ringfence their savings.
“You don’t get cash, you get vouchers, which you spend on what you got them for,” he said.
“If it’s cash, I know I spend it without thinking. With vouchers, you don’t.
“It makes sense to plan. It’s painless. You don’t miss a few pounds every week, but when you get to Christmas it’s £374.”
Park also sells vouchers to corporate clients for use in incentive schemes. The company is now targeting 700,000 small and medium enterprises to try to broaden its customer base.
Park is also developing its online presence, with ventures including online magazine myparkmag helping it recruit more customers.
In the half-year to September, online voucher sales rose 117% to £1.3m – a rise from a small base, but one Houghton says shows how much potential growth there is on the web.
In the wake of Farepak – that word again – the Christmas savings industry also took steps to reassure customers that their money was protected. Park was a founder member of the Christmas Prepayment Association and has set up a designated trust account with independent trustees to hold savers’ money until their goods are dispatched.
“It has been important to get confidence back,” said Houghton. “We’ve been very serious about it.
“We’ve got two independent trustees who won’t release the money until we release the products.
“It has increased our costs a bit, but that’s the price of doing business. We’re pleased it’s working well.”
Houghton’s family gets a hamper every year and he says the festive season wouldn’t be the same without it.
“They’re a traditional part of Christmas and really exciting when you get them,” he said. “You get all the goods covered in shredded cellophane and you have to pull them out – it’s like a tombola.”
alistairhoughton
