Blackfriar: Shareholder influence has echoes in the boardroom

The recession has made the home shopping business a tough game to be in, with consumers wary about spending and rising bad debts among customers who pay with credit.

The Burley-in-Wharfedale's share price has been battered, and currently stands at about 23p.

From about 103p under a year ago, and the 780p all-time high in 2007, the fall has been catastrophic.

In his late 60s, Mr Chapman was probably heading for retirement but while Findel said Mr Chapman himself "decided" to step down, the immediacy of his departure and lack of a transition period suggested that the company felt haste was of the essence.

New chairman David Sugden thanked Mr Chapman for his efforts over the years, but there was no word from Mr Chapman himself.

While Blackfriar believes Mr Chapman's energy and vision was a major force behind growing Findel into one of the UK's biggest home shopping firms, there is little room for sentimentality in the world of business.

In his 26 years at Findel, Mr Chapman transformed it from a traditional greetings card maker to a business spanning direct mail ordering, consumer credit, education and health supplies, as well as the traditional card business.

At the end of the last century, he demerged the group into two separate businesses, then selling the card arm to Hallmark, netting a tidy sum from his stake.

In 2004, the Yorkshire Post named Findel's management team Board of the Year, after a successful turnaround to combat a slowdown in education spending.

Meanwhile, Findel was busy buying, snapping up 13 businesses between 2001 and 2008.

Some of these, however, never really took off.

When Findel bought Cornish children's gifts and toy firm Letterbox in 2006 for 7m, it was a "good strategic fit". When Findel bought Manchester-based home furnishings business Cotswold in 2007 for 100,000, it was called "an excellent addition". But last year Findel closed the loss-making Letterbox and Cotswold Company mail order businesses, with 50 job losses and impairment charges of almost 24m.

"They went out and spent a whole lot on cash-with-order businesses – they paid top whack on internet purchases," said a source.

All of this meant Findel entered the recession with more debt than it ought to, forcing it last year to tap major shareholders, including Mr Chapman, for 81m to prop up its balance sheet.

Findel was not alone in seeing an acquisitive strategy backfire on its founder. Leeds utilities support company Spice recently parted company with its chief executive and founder Simon Rigby, after his desire to keep buying clashed with investors' wishes.

In Spice's case, it bought at least 35 companies since 2001, for a maximum consideration of 300m. But when debt wasn't tackled as they wanted, and hedge funds started shorting Spice, investors voted with their feet.

Also concerning for Findel investors were question marks over its financial reporting, such as a shock profits warning in 2008, which came only two weeks after an upbeat trading statement.

"On the guidance side of things there have been statements which were not as clear as they could have been," said a source.

Now, Findel's new management needs to convince investors they are serious about cutting debt and costs while restoring shareholder value. Analysts called for a "clean sweep", to reboot investor confidence.

Whether the group will be able to do so as an independent company remains to be seen, with a private equity buyer rumoured to be circling all or part of the company.

As the departure of Mr Chapman shows, when investors have been hammered, sentimentality goes out of the window