Nectar owner makes loss
Greater than expected points redemption levels hit figures
Loyalty Management UK (LMUK), the owner of the Nectar card programme, made a £28.5m loss after recalculating that users would redeem more loyalty points than it had previously anticipated.
The loss covered the 15 months to December 2008.
Accounts filed at Companies House show that LMUK made a £27m provision after the change in the forecast of the redemption rate on points earned before October 2007 at partners such as Sainsbury’s and Homebase.
The provision was made after Groupe Aeroplan bought LMUK in 2007 and introduced a new financial model. It was then calculated that the original budget of £175.8m was £26.9m short of the required figure to cover points redemption.
Nectar says that in effect it has been a victim of its own success in the amount of points being redeemed.
Mark Grafton, chief financial officer at LMUK, said the recalculation did not necessarily mean that shoppers were redeeming more points during the recession.
The Nectar programme has paid out £1.2bn in rewards to customers since it was launched in 2002.
In a separate announcement, secondary ticketing company Viagogo is partnering with Nectar to allow Viagogo users to collect points when they buy concert tickets.
The ticketing operator has developed a new Nectar ticket exchange at www.nectar.com/tickets