Sales improve as Findel gets debt issue under control

FINDEL, the home shopping and educational supplies firm, said that a major efficiency programme and a further reduction in debt should enhance profits.

The Burley-in-Wharfedale-based group added that “substantial headroom” in its banking facilities meant that it was once again in a position to optimise shareholder value.

Group sales for the six months to October 3 were £277.2m compared to £287.7m for the same period 2008.

Product sales are up 5% with record customer retention rates and a growing customer base.

Although the period saw the firm record a pre-tax loss of £21.1m compared to a profit of £1.8m the year before Findel said the difference between the benchmark and statutory result related to a £11.9m in fee as a result of debt refinancing.

In August the group announced the successful share raising of £81m through an equity issue.

As a result of getting its bad debts in control the group has increased its target to reduce borrowing by £165m from £100m in the three financial years to March 2011.

It is also targeting a reduction in stock levels of £40m by March 2011 and has recovered around £8m through tax rebates not included in its original programme.

Its home shopping business has seen a slight improvement on last helped by Findel’s acquisition of the Webb Group – one of the UK’s leading home entertainment product providers.

The credit business has continued its expansion into the UK mail order clothing market with the range of clothing and footwear offered significantly increased.

Kleeneze, Findel’s direct selling brand, delivered a solid profit performance, while Kitbag had a very successful six months with strong sales including a new contract with Everton FC and operating profit growth.

Education supplies however dipped 20% on last year to £74.5m with around half of the shortfall attributed to reductions in export and projects.

Findel said it had rationalised its stock ranges and had all but ceased the use of outside storage and closed its Hyde warehouse.

Keith Chapman, Findel’s chairman, said: “The economic climate remains uncertain and the Board therefore remains cautious.

“Against this a further £15m of firm cost savings have been identified and will benefit the group in the next financial year. The group’s ability to generate improved results should be greatly enhanced by the cost saving actions we have taken and continue to take.”