Education blow dents Findel

FINDEL, the listed group based in Hyde and Accrington, said a weak end to year in its education divison would mean profits will come in “slightly below” analysts’ expectations.

The company which has recently sold its loss-making Kleeneze business said results for the year ending March 27 would still be  “substantially ahead” of the £22m achieved on in the year to March 2014, but would be below the £27.1m to £28.5m forecast.

In a close period statement ahead of the publication on the results in June, Findel said it had seen a “year of significant progress”, with overall sales (excluding Kleeneze)  2.7% ahead of the prior year and profit before tax substantially ahead driven by a further strong performance from Express Gifts and a significant reduction in losses from Kitbag.   

The group’s largest business, Express Gifts, has seen strong growth in its operating profits in the last 12 months.  Total sales are 4.8% ahead of the prior year, with product sales ahead by 6.6% and up by 7.9% in the final quarter.

Findel Education, which supplies schools and colleges,  has had a tough year with sales in the second half being particularly challenging.  Full year sales were down around 6.5% against the prior year and sales in the final quarter down by 9.2%.

The outlook for the unit is seen as challenging too, as the company warned that spending is likely to be squeezed further by the future government.

It said: “Market conditions continue to present challenges for this division, with recent analysis from the Institute of Fiscal Studies indicating that both major political parties would implement real-term reductions in spending levels per pupil in the next parliament.  The management team is being strengthened and marketing improvements are being implemented ahead of the new catalogue launch later this month.  

“Whilst the board retains confidence in the long term future of this business, market conditions mean that achieving the board’s aspirations for the business will likely take longer and be harder than previously anticipated.”

By contrast, Chadderton-based sports-retail subsidiary Kitbag has seen “a strong recovery in its performance”, driven by a record Christmas trading period and tighter control over product margins and stock levels.  Sales for the year are up 10.5% and although, as expected, the division will continue to report an operating loss for FY15 this is substantially reduced from the prior year.

Findel, which is willing to sell the unit for the right price, said a strategic review is continuing.

Meanwhile, the group said full year net bank debt at 27th March was approximately £87m, some £10m below last year.

In conclusion, the company said: “Looking forward to FY16, the challenges ahead for Findel Education are likely to result in a flat profit performance at best for the division.  The impact of the strengthening dollar on import prices is likely to provide a headwind to Express Gifts, although its operating profit for FY16 is still anticipated to grow at a similar rate to this year. Overall, we look forward to another year of strong progress.”