Interim results from shopping-at-work concern Premier Direct have coincided, like last year's, with another strategic review of the business.

Describing recent trading as 'challenging', chief executive Eric McClenaghan reported a 16% decline in sales to £10.7m for the six months to January, for which he said the sales force had to share the blame, having simply 'sold less', despite ample investment behind them. The sales fall reflected a 10% drop in average sales per distributor and a dip in activity rates from 81% to 76%.

This time last year, the distributor network was restructured alongside warehouse and returns functions. This year's figures have inspired similar introspection and McClenaghan has begun a two-day review ‘to look at what we can do better’. Possible options at the ‘very expensive’ network include cutting numbers by 20% or hiving off 50 salesmen to join the Oriflame cosmetics arm.

2006 acquisition Oriflame, which kept sales stable and launched a new shopping-at-work stream, should benefit further from several senior group appointments, allowing McClenaghan to donate more time. The plan is to expand its own sales force from the present six to at least 26 by the year end.

During the half-year, margins in the core business swelled from 32.7% to 36.4%, contributing to a 9% lift in pre-tax profits to £924,000. McClenaghan believes recent steep hikes of labour costs in China, where the majority of the company's products are made, will dent margins by around two percentage points in the second half.

Premier Direct looks cheap on a prospective p/e of less than seven times full year earnings, yet investors who have already had their fingers burned may be reluctant to return despite the example set by PDR’s institutional investors, which all supported a recent £1.15m placing. Only for the brave, however.

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