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Trading statements

Findel has encouraging start to 2016

29 July 2016 07:44

At Findel's AGM today, chairman David Sugden will make the following remarks on trading for the 17 week period from 26 March to 22 July 2016.

CURRENT TRADING PERFORMANCE

"The group has made an encouraging start to the year, with overall sales up 5.3% on the prior year.

"Within this, the group's largest business, Express Gifts, has seen a very strong early response to its new marketing campaigns and is making good progress against its net new customer target of 100k for the full year with product sales growth of 14.5% for the year to date.

"Product sales growth is expected to moderate as recruitment investment into peak season moves closer to prior year levels.

"Much of the recent campaign, which includes TV advertising, is based around deeply-discounted introductory offers such that the gross margin rate is lower and marketing costs are higher than in the equivalent weeks of FY16.

"Financial services revenue growth remains strong as a result of product sales growth and the roll-out of risk-based pricing, although the higher number of new customers is likely to lead to a slight increase to the overall bad debt charge for the year.

"Findel Education has continued to see difficult market conditions with increased pressure on the proportion of budgets being allocated to educational resources within schools in recent weeks.

"After adjusting for timing differences on the Sainsbury's Active Kids scheme, year-to-date sales are c.8% less than the equivalent period of last year, however the business is close to halting the market share decline.

"The warehouse and systems integration projects remain on track to be completed in calendar 2016 and to deliver the planned benefits for FY18.

"In view of market conditions, the target of maintaining sales at prior year levels is unlikely to be achieved and the operating profit for FY17 for this business is therefore expected to be lower than previously anticipated."

VOTE TO LEAVE THE EU

"The group's hedging strategies mean that around 70% of planned US dollar purchases for the next 12 months and around 80% in the current financial year have been covered at an average rate of c.£1=$1.44.

"The group is therefore well positioned to mitigate any currency effects of Brexit in the current financial year.

"The effect on consumer confidence is being closely monitored but at present does not appear to be affecting sales."

UPDATE ON DISCUSSIONS WITH SPORTS DIRECT

"On 1 July 2016 the Board of Findel announced that it was in early stage discussions regarding a possible commercial supply agreement with SDI and a proposal that Mike Ashley be appointed chairman of Findel to replace David Sugden, who had previously indicated his intention to step down from the Board at the conclusion of today's AGM.

"The Board remains of the view that there is merit in a commercial supply agreement with SDI, but SDI are unwilling to take this forward until the role of Mike Ashley on the Findel board is clarified.

"The Board has decided not to appoint Mike Ashley as chairman and will now move as quickly as possible to appoint an independent executive chairman.

"As a result of the delays to this appointment, David Sugden will continue as executive chairman beyond his planned departure date until such time as a replacement has been appointed."

OUTLOOK

"Whilst it is still early in the year, and with the peak selling season for Express Gifts still to come, the strong product sales and improved financial services income in that business are expected to compensate for weaker margins and the difficult conditions facing the education supplies market.

"As a result, the board continues to anticipate an overall group performance in line with expectations for the full year."

Story provided by StockMarketWire.com

Related Company: FDL

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