Dream Direct issues a profits warning

Dream Direct is restructuring the business following a profit
warning in its latest financial update. Whilst sales in its home
entertainment categories (namely Razamataz and to a lesser extent
Boogaloo and Buyithere) were in line with expectations, overall
sales were down 21 per cent. This was attributed to disappointing
sales in its household and leisure categories. Accordingly, the
company has decided to discontinue most household and leisure
ranges and to operate from a “slimmed-down”
infrastructure. In addition, Dream Direct Group has had to source
additional funds to support its working capital requirements.
These funds will be provided by an increased bank overdraft of
£400,000, co-guaranteed by Robert Colquhoun and Ollie
Vintcent. In a statement to the City, Colquhoun said,
“Following the decline of our original home software
market, our 2006/7 strategy of expanding our ranges has been only
partly successful. With hindsight our ambitions for the new
household and leisure categories were overly high in a crowded
market with limited scope for differentiation. However expanding
the entertainment categories has been successful and we now have
a profitable business at the EBITDA level.” Going forward,
the group expects a loss for the year of £800,000 after
restructuring costs. It aims to deliver a full year profit in


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