Firm now moving to adjust to lifestyle changes

Analysis: Executives at Waterford Wedgwood are confident they are at, or close to, a turning point in the group's fortunes.

Tough markets, adverse currency movements and new low-cost competition have forced them to radically restructure the group. Management points to the "Plan for Growth" unveiled in June, which has targeted debt and inventory levels, more efficient use of production facilities and stronger management. This has seen the group sell All-Clad at a sizeable profit, and impose short-time working to cut stocks.

Significantly, following the arrival of new chief operating officer Mr Peter Cameron, Waterford Wedgwood finally seems to be coming to terms with the lifestyle changes, putting greater dependence on casual ranges rather than its more established brands. It is also adopting a more focused approach to distribution channels and customer service.

Stabilising sales this month have raised hopes of a reasonable Christmas trading period. However, the company accepts that it is likely to be 2006 before much of the benefit feeds through to the bottom line.

Following a series of false dawns, it will take more than upbeat comments to restore the market's faith in a group that has moved from being a blue-chip of the Dublin market to one whose share price is currently dragging along at 10-year lows.

Analysts say the company will have to deliver proof of its recovery before it can expect any improvement in sentiment.

"The October sales performance was poor and the outlook remains very challenging," said NCB analyst Mr John Sheehan. "Selling All-Clad has cut debt but profitability remains elusive at current sales levels and currency rates.

"Despite the stock price decline, we remain cautious until there is evidence of both working capital improvement and some sustained recovery in sales."

There are mixed views among analysts on the prospective purchase of Royal Doulton.

While the company points to the synergies that any merger would create, with production switching to Wedgwood's nearby operation and distribution and retail cost savings, there is concern that the company is merely increasing its exposure to what is seen as a contracting industry.

The one thing all sides are agreed on is that Waterford Wedgwood is running out of chances.

As one analyst put it: "They cannot afford too many more periods like they have just had."