Uncertainty over a number of major contracts at St Ives could put a crimp in the group's plans to sell off its print operations.
It is more than two months since St Ives chief executive Matt Armitage announced a strategic review was underway, effectively putting up a for sale sign when he pledged to take decisive action over its “legacy businesses”: £68.6m turnover book printing operation Clays, and the £154.8m turnover Marketing Activation division made up of SP Group, Service Graphics, Tactical Solutions and St Ives Management Services.
At the time Armitage said: “This is a priority for us in the months ahead and we will continue to report on its progress,” but since then a wall of silence has descended on the business, while its share price has fallen even further to a new eight-year low of 48.4p.
Speculation is also mounting about a number of important contracts currently held by the group.
PrintWeek has learned that St Ives has already lost its print management contract with HSBC, which is understood to be moving to Communisis.
In addition, two of the group’s major point-of-sale contracts are up for renewal this year.
The Sainsbury’s work is out to tender at the moment, with the retailer understood to be close to making a final decision on its future supply. Sources close to the situation believe St Ives is likely to lose out. “Ideally they [Sainsbury’s] want a roster of suppliers,” a person familiar with the situation said.
Later this year Marks & Spencer will also go out to tender. St Ives was awarded a long-term contract with the retailer to supply all of its point-of-sale requirements back in 2005, when it also acquired the M&S inplant print facility in Burnley. That site was closed in 2015.
Book printing operation Clays lost its HarperCollins contract to rival CPI earlier this year, and is also facing an upcoming review of the substantial contract for book publisher Hachette.
The HarperCollins contract expires next month, while Hachette runs until next year.
A senior industry source said: “Any buyer will want comfort from due diligence that the contracts are going to be renewed. The uncertainty over these contracts probably explains why St Ives has not yet been able to announce a sale. It does not sound good.”
Armitage has not responded to requests for comment.
When the review was announced he also said the group was taking action to reduce costs and improve efficiencies.
The PLC has mothballed the screen printing lines at SP Group, and made an unspecified number of redundancies at the Redditch business. Local sources said there have also been redundancies at Clays, where St Ives is understood to be pushing for a move to seven-day working.