Blavod suffers Christmas hangover following abrupt dip in sales

Blavod Wines & Spirits (AIM: BES) warned that full-year profits will be severely affected by an abrupt slowing in sales volumes. During the third quarter ended 31 December 2009, sales were well below expectations and Blavod now expects to break-even in the full year, compared to reaching a profit of 185,000 in the previous year.

The worse-than-expected performance was the result of higher retail prices for several key products as a result of exchange losses and unexpected one-off costs, Blavod said.

The company said its very prudent approach to its credit policy also constrained sales in the UK and among its export business. Furthermore Blavod maintained it investment spending programme, which was significantly higher level than a year earlier. The company's investments focused on branding and a newly-strengthened sales force.

Blavod expects an improved performance in the fourth quarter; however this will not be sufficient to regain the lost momentum during the important Christmas and New Year period. The board said it has access to sufficient funds for its operations for the foreseeable future.

Whilst it is disappointed with its Q3 performance, the board said it is confident of achieving a meaningful profit in 2010/2011. According to Blavod, future improvement to margins, new distribution initiatives and new product launches can provide optimism.

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