Computer glitch costs Royal Doulton pre-holiday sales

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BRUCE STANLEY

LONDON (AP) - With more than 200 years of experience behind it, fine china manufacturer Royal Doulton thought it was being prudent when it installed a new computer system to guard against the Y2K bug.

But the cure for the potential illness took a painful toll. The company said Wednesday it will lose an estimated $19 million US in sales because the new equipment caused delays of up to 10 weeks in deliveries of its goods to distributors.

The problem comes as Royal Doulton, which has been making fine china since 1748, approaches its most important period for sales: the weeks before Christmas.

Investors reacted to the announcement by dumping the stock, which plunged 23 per cent.

The new system was installed to avoid potential problems when the Year 2000 arrives. Many older computers and software programs recognize only the last two digits of the year and could mistakenly interpret "00" as 1900.

The glitch apparently arose because of problems integrating the new equipment with the company's existing computers. As a result, the china maker was unable to supply distributors when they ran out of inventory.

Spokeswoman Valerie Baynton said Royal Doulton has solved the problem, but the expected loss is equal to five per cent of Royal Doulton's sales for all of 1998.

"It's very frustrating," Baynton said from the company's headquarters in Stoke-on-Trent, north of London.

The company's profit warning is its latest setback in recent months. Interim sales so far this year, $144.5 million US as of the end of June, are already well below their 1998 level of $173.6 million US.

Chairman Hamish Grossart said operating losses for the year would exceed analysts' forecasts of $16 million US.

Sales of Royal Doulton's traditional tableware have suffered from a decline in formal dining and the rise of convenience foods and TV dinners.

Tougher competition from Waterford Wedgwood PLC and other china makers have hampered business, as has the company's decision to discontinue shipments to discount retailers.

In response to depressed sales, Royal Doulton announced last December it was laying off 1,200 workers, almost a fifth of its workforce.

-- Roland (notteling@nowhere.com), November 11, 1999