DX Group’s new management team has said its turnaround strategy is bearing fruit, as it made a cash call to investors for a further £4m to support its plans.
After a horrific 2017, which saw the senior management team forced out after a power struggle with shareholders led by Gatemore Capital Management and the business record an £80m loss, the firm’s boss said today (29 March) that progress had been made.
With revenue in the six months to 31 December 2017 up 2.7% at £146.6m (2016: £142.7m), the company made a pre-tax loss of £9m (2016: £500,000 loss) before exceptional items.
However, an exceptional charge of £5.1m relating to, in effect, reversing the previous management’s plan to combine operations under a plan dubbed OneDx was significantly lower than the £27.4m of exceptional items recorded in the same period a year ago.
It meant DX Group’s reported pre-tax loss was £14.1m compared with £29.3m in the last six months of 2016.
Funds for the future
Last autumn DX safeguarded its immediate future with a successful £24m fund raising via the issuing of loan notes. Lloyd Dunn the former head of Tuffnell’s was revealed as its new chief executive at this point.
In a statement today, Dunn said: “It is clear that our new structure and strategy as already making progress. This, combined with the support of our major shareholders, means we can provide the necessary investment in sales capability, operations and IT.
“DX is a sleeping giant – if we keep out focus and momentum, DX will once again be a force to be reckoned with,” said Lloyd Dunn, chief executive of DX Group.
The strategy
Key to reversing DX’s fortunes, according to Dunn, is placing depots and service centres at the heart of DX, giving greater operational responsibilities and authority to general and regional managers.
The additional £4m will be used to expand the sales team, add new depots to the firm’s network and improve the group’s IT.
DX Freight, described as severely under-performing, has been earmarked as the initial focus of the turnaround. It comprises the next day, home delivery and ‘logistics solutions’ part of the business. The latter tied into DX’s growing Ikea relationship. The company's other division is DX Express.
“Following a careful review of the business it is clear that there is a great foundation to build upon with market leading products, a strong service culture supported by a loyal and invested team.
“We’ve been especially impressed by the quality of the people working within the business who want to deliver an excellent service and are committed to the future of the company,” said Dunn.
He added: “Key to the early success of our plan has been devolving accountability to depot general managers and regional directors, who are being given greater operational responsibilities and authority.
“This is driving the business supported by the creation of a commercial function, improving the quality of the contracts we win and manage.”
