Retailer Results / Findel



Trading Update
52 weeks ending 25 March 2016

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Trading Update
26 week period ended 25 September 2015


• Findel’s performance in H1 was below expectations with revenue of H1 2015 £191.4m (H1 2014 £192.2m)
• Express Gifts performance was below expectations with revenue growth of 2.7 per cent and flat operating profit
• Findel Education's continued to struggle in difficult market conditions. Early signs of recovery in market share for the core School brands. Revenue was down 8.2 per cent, although the rate of customer number decline has eased in core markets


Summary - Express Gifts

Express Gifts achieved total revenue for the first half of the year grew by 2.7 per cent to £133.2m (2014: £129.7m). There is a high level of seasonality within Express Gifts, with around 60 per cent of product sales occurring in the second half of the year. The operating profit for the quieter first half of FY16 of £4.9m is marginally ahead of the prior year, with the growth in sales and improvement in bad debt being offset by the investment in infrastructure and headcount from the second half of last year noted above.

Overall, this was below expectations and down on previous rates of growth. Management reported an unexpected slowing in demand from autumn catalogues, mainly from new and dormant customers, reflecting a tougher autumn particularly in recruiting new customers. Nevertheless, sales growth from established customers has been more positive at 7.4 per cent. Overall sales for the business, including financial services revenues, grew by 2.7 per cent in H1 – a disappointing half.

Management remains upbeat about underlying strength and competitive positioning of Express Gifts, particularly with the plans for all year round investment in customer recruitment from FY17.

As announced on 29 September 2015, Findel have received an approach to purchase Kitbag and terms for that transaction have been agreed subject to contract. The buyer is taking longer than expected to finalise their funding for the transaction and until this is completed there can be no certainty that a transaction will be agreed. Discussions are ongoing.
Kitbag's trading performance in the first half of FY16 was disappointing, with revenue of £33.3m being 2.1 per cent lower than the prior year and operating losses widening by £2.7m to £4.2m (2014: £1.5m).

David Sugden, Executive Chairman, commented: "Express Gifts has seen a remarkable improvement in its performance over the last four years and the business is confident that the recent slowdown in new customer recruitment will be reversed in future campaigns. The plans for recruitment all year round and maintaining the focus on delivering good value products to its 1.4 million customers position it well for the future.

“Overall, we remain well positioned to deliver an increase in profit before tax for the full year in line with expectations."

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