Last updated at 14:33, Tuesday, 21 July 2009

FURNESS scented candle company, Colony Candles, was losing £4.5m a year and had £14m of debts when it was rescued by a Cheshire entrepreneur.

Now, two years later, the owner of Colony Gift Corporation, Mike Armstead gives a satisfied smile when he tells you the company is in profit again, and that he is optimistic about the future of the Lindal plant.

Colony Candles, as it is widely known, is still the biggest scented candle and fragrance products manufacturer in the UK, supplying retail shops and stores at home and abroad.

It was founded in 1980 by the late Alan Williams and his wife and sister-in-law, who finally sold the controlling share to American firm Blyth Inc (which had part-owned it for years) in 2001.

But two years ago, with costs rising, Blyth sold off its European retail candle companies including Colony.

Since Mr Armstead bought the firm his former business partner in the venture has moved on, and the Lindal factory has been slimmed down from around 200 staff to 150 to help slash overheads. It was done mostly through natural wastage with no mass redundancies.

He said: “Quite frankly it was in a bad way, so the whole of the two years has been turning the company around and getting it back to a positive cash flow and a profitable position.

“If you have more money going out than you have coming in you are in trouble and they had lost sight of that really.”

Mr Armstead had a glittering career holding some top posts with blue chip firms including BP, Dalgety and Nestle, before becoming an entrepreneur.

His wife, Jen, is a Cumbrian girl from Carlisle, and since buying Colony the couple have bought a second home in Satterthwaite. They move between their Cheshire and South Cumbrian homes.

He says when he was offered Colony the figures looked grim and he expected to find ‘a farm-type shed with stock lying about all over the place’.

But the smart site and its staff took him by surprise. It was impressive and looked as though the concern should be doing better.

He said: “ We are still a big employer in the area. We have a brilliant, stable staff who are really committed to the future of Colony.”

The way that the firm’s sales and exports are picking up, and the boom in sales in their fashionable new reed diffusers in particular, means there could be more jobs again at some future point.

The diffusers comprise a bottle of scented liquid in which reeds are placed.

Liquid moves up the reed’s capillaries to give off the scents created by European fragrance houses.

The diffusers last for up to six months and cost between £8 and £20 and the public can’t seem to get enough of them.

This year, the company sold more in two months than it expected to sell in a year.

The company has about 3,000 products in all including its traditional Wax Lyrical brands with a host of different scents and the Lindal shop continues to attract tourists and shoppers from the north west.

There is also a new Jelly Belly range based on jellybean flavours.

Some recent deals, including one with the British Horticultural Society, to use illustrations from its famous Lindley Library of plant on packages and tins of candles and fragrance products, and a range of appropriate scents, has brought rapid success at home and strong interest from abroad.

Japan and the US are seen as great export markets for the range.

Mr Armstead said the losses at Colony had been down to lots of factors including deals struck with superstores where the profit margins on candles were ridiculously low.

They announced they were pulling out of deals only to find stores willing to renegotiate a higher price.

Rather than bewilder the staff with hard-to-fathom financial reports, in the early days he would give them easy to grasp bulletins such as “the patient is frail and ill and is in intensive care” to let them know things were tricky. Then that became “We are in a private ward, but the nurse sleeps with us to check we are breathing”

That moved to: “Great news, we are being sent home, but we are still very poorly, we have got to convalesce.”

A recent one warned that though things had improved greatly for the company it now had to endure a storm not of its own making – the recession – and “everyone must stay strapped in” for now.

When he took over Colony about 40 per cent of its candle products were made in the Lindal factory, and 60 per cent were imported. Now it is 70/30 the other way round.

Rising costs in countries like China, and a new European import duty on wax products, have made manufacturing at Lindal more attractive again.

Supermarkets are also getting more conscious of the climate change arguments in favour of stocking local or UK products that have not run up big CO2 bill in transport.

Colony now capitalises on this with Union Jacks on many of its products to urge people to buy British.

 

Mr Armstead has been involved in other entrepreneur projects including being part of a group which bought a dwindling tyre factory in Manchester freeing up 12 acres of city centre land for other developments.

With a hint of the cautious Mr Micawber, Mr Armstead says of Colony now: “We have got success but let’s not get carried away. We are going to keep the overheads very tight until we know we are well past the safe mark.”

First published at 13:07, Monday, 20 July 2009
Published by http://www.nwemail.co.uk