Nectar slump forces Aimia into slash and burn plan

Nectar-cardAimia, the company behind the Nectar loyalty scheme, has been forced into a drastic cost-cutting programme – including plans to scrap over 200 jobs, slash C$40m (£19.8m) out of the business and dispose of “non-core assets” – following another disastrous quarter.
Gross billings for the Canadian group were C$580.3m (£286.9m) in the third quarter compared to $633.2m (£313.m) last year.
On a constant currency basis, gross billings declined by $77.9m (£38.5m) with a $44.4m (£21.95m) decline in the EMEA region, where the business continues to be hit hard by Sainsbury’s decision to rein in rewards and restrictions on energy suppliers.
Nectar UK points issued decreased by C$30.3m (£15m), down 25.4%, in the quarter; on top of a C$12.0m (£5.9m) drop in the previous quarter.
Meanwhile, the loss of Nectar Italia main retail partner – supermarket chain Auchan – led to the scheme taking a $33.4m (£16.5m) hit.
To counter the decline the company says more than 200 employees are expected to exit the business by the end of this year, although it did not say how many of these will be in its UK operations.
Having already announced C$20m (£9.9m) in annual savings in August, through an operational restructure, the company has identified a second C$20m (£9.9m) of cost savings by the end of 2016, which, it says ” will counter any further deterioration in the economic environment”.
Aimia has also engaged advisors to consider and evaluate potential disposals of non-core assets.
Group chief executive Rupert Duchesne said: “We knew that 2015 would be challenging, due to, most significantly, the effects of interchange rate negotiations and the slowing economy.
“As the impact of some of those issues became clearer, we took decisive action. Despite a slower economy, we expect this quarter to be an inflection point on the way to topline growth in 2016.
“Nectar will continue to evolve into a next-generation coalition program that’s more flexible for partners, digital at its core and responsive to individual member tastes and preferences.
“The value embedded in our investments and the financial flexibility provided by a strong balance sheet, together with our improved operating leverage, will be important assets in light of debt maturities and contract renewals as we enter 2017 and will position us well in light of any further economic uncertainty in 2016.”

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