SP Group’s owner has cited the loss of a major customer and a catastrophic halving of forecasted sales at the business as precipitating the shock decision to put the business into administration.
Landry Kouakou purchased the Redditch retail print specialist from St Ives through his SelmerBridge investment vehicle in March, as part of a £6m deal that included Service Graphics and Tactical Solutions.
SP was placed into administration yesterday (25 July) after its trading position became unsustainable.
Kouakou told PrintWeek that his assumptions about the quality of the firm’s customer base and the strength of its customer relationships had proved misguided.
“I bought the business on the assumption that the major customer base would remain stable or could be improved in the mid-term,” he stated.
“I also assumed that the previous customer service experience was of a consistently good quality without major issues; which was not the case with all customers.”
Kouakou said he believed he could focus attention on improving operations and turning the business around, which resulted in the decision to invest in new HP Indigo equipment for the site to improve efficiency, reliability and quality.
However, the decision by a major customer to review its contract, with little apparent chance of SP retaining the business, proved catastrophic.
“The turning point was the decision of a major customer to tender early with a very low probability for SP to retain the contract based upon service issues under previous ownership,” Kouakou stated.
A source close to the situation told PrintWeek that the major customer involved was Whitbread.
Kouakou said it had been impossible to adapt the cost structure at SP “in a context of annual sales moving from around £40m at the time of completion, to £27m in June and further predicted to be just £21m later this autumn. The impact was too rapid and left the business unable to reduce costs sufficiently quickly whilst still providing the service expectations customers require.”
“I am deeply saddened by the situation at SP especially for all the employees that have worked with us over the past months to try to revert the trend,” he added.
Administrators from Duff & Phelps are now looking into what, if anything of the business can be salvaged. PrintWeek understands that some of the firm’s 371 staff could be Tuped over to a print management company as part of the movement of contracts resulting from SP’s administration.
SelmerBridge has emphasised that Service Graphics and Tactical Solutions are unaffected by events at SP.