Findel anticipating better pre-tax profits, update reveals

Findel, the online value retailer and education business which rejected a hostile takeover by Sports Direct boss Mike Ashley, said it expects annual pre-tax profits to slightly exceed market expectations.

In a trading update for its financial year to March 29, it said the draft unaudited results show that the full-year profit before tax for the year is slightly above current market expectations of £27 to £28m.

The group said Studio saw good trading in the seasonally quieter weeks of the fourth quarter, with garden ranges benefiting from the warmer weather in early February and homeware ranges trading well throughout.

Collections and recoveries from credit receivables have been in line with plan.

Education saw an acceleration of its customer recruitment during the fourth quarter and a further increase in online ordering levels, which is encouraging as the group goes into the new financial year.

Findel’s core net debt ended March 2019 at around £57m, down from £73.8m at the end of March 2018.

The group’s audited results are scheduled to be announced on Wednesday, June 5.

Sports Direct launched its £139m bid for the Accrington-based group in March this year, which Findel rejected as “opportunistic”.

It urged shareholders to ignore the approach.

And in a Stock Exchange statement last Friday, it appeared shareholders had heeded that advice, with Sports Direct confirming it had only received acceptances from the equivalent 0.99% of Findel’s issued share capital.

That gave Sports Direct just 37.84% of the company’s stock, including its existing 36.84% holding, which was significantly short of the target of more than 50% of the voting rights.

With Sports Direct deciding not to increase its offer, the takeover bid lapsed.

Kate Heseltine, analyst at Edison Investment Research, said: “Findel’s attractive online-led value proposition is continuing to deliver impressive results.

“With the unsolicited mandatory offer by Sports Direct having lapsed, Findel has issued an upbeat pre-close update confirming a solid trading performance in Q4 in both studio and education and expectations for FY19 underlying pre-tax profit to slightly exceed the current market consensus of £27-28m.

“Core net debt of c £57m at the end of March represents a c £17m reduction year-on-year.

“Since the start of the year the share price has fallen by over 20% which seems unjustified given the strength of trading and ongoing reduction in core net debt.

“In our view, minimal take-up (0.01% of Findel’s issued share capital) of the recent unsolicited mandatory offer by Sports Direct at 161p demonstrates ongoing support for the strategy and future growth prospects.”