Analyst raises concerns over the Home shopping group Flying Brands, which specialises in gifts, gardening and entertainment products.
In a research note released on Monday (30), broker Seymour Pierce has said it is worried about the 'soft performance of the core brands, with each of them in negative territory' despite seeing the Flying Brands' business model as viable.

"In particular, the acquisition of new customers (despite the fact that more are recruited online) does not seem to be getting any easier," Seymour Pierce said.

It went on: "With the continued circulation declines of printed newspapers reducing the effectiveness and efficiency of one of Flying Brands' recruitment media, we can see the business continuing to have problems".

Seymour Pierce's research also highlighted a reduction in marketing spend to maintain profitability in the first half of its financial year, adding that this resulted in a 'reduction in an active customer database for sales growth' in the second half.

Flying Brands reported flat pre-tax profits of £3.1m in the first half of 2007 on sales up 20% to £25.2m.

The group said it sold its Kelvedon Park call centre for £4.5m cash and will use monies to fund future acquisitions or partnerships.

Chief executive Mark Dugdale described the first half of the year as one of consolidation in which the group had maintained margins, despite having to absorb cost increases.

Sales via the internet rose 26%.