Findel shares hit by divisional difficulties

1st Oct 2013 10:37

Shares in UK Home Shopping and Education business Findel took a hit on Tuesday after the group warned of problems within its Kleeneze business, and decline in Kitbag sales, increasing first-half losses. Within Kleeneze, the company's efforts to arrest decline continued, however comparators to the prior year worsened slightly since its July statement, with sales for the period down 3.4% versus prior year. Despite this, recent deterioration was largely accounted for by a change in catalogue timing, with a later launch of the Christmas catalogues this year, it said. Kitbaf sales declined 6.9% as a result of poorer comparative on-pitch performance from some key partners, as well as the absence of the benefit of the European Football Championships and the Olympics. As such, first-half losses increased versus last year, with an element of clearance also affecting margins. The firm was keen to stress that the business continues to make progress on its turnaround and has implemented a number of initiatives in the first half - particularly to improve international sales, which have risen by a substantial amount over the period - that are expected to yield a benefit in the second half. A more positive report was given for the Education Supplies business, which it said is now well on the road to recovery and has achieved a much improved first half performance. Sales were 8.2% ahead of prior year, with an associated improvement in margin and profitability.Express Gifts, the group's largest business, maintained a strong sales performance, with sales 10.8% ahead of the prior year. Overall, group sales during the first half were 5.2% ahead of the prior year (6.2% excluding our Far Eastern sourcing operation), leading to an increase in first-half operating profit. Looking ahead, the group said: "We are very encouraged by the progress that we have made and the clear evidence of the success of our turnaround. In particular, Express Gifts has yet again delivered a strong performance and the Education Supplies division's strengthening continues. "We are therefore well positioned ahead of our important peak trading period. Looking ahead, we see further potential in all group companies, and our strong performance in the first half of this year leads us to reiterate our ambition to enter a 7-9% range for group operating margin in the financial year commencing April 2014."Total bank debt for the group is expected to be in the region of £237m, £15m lower than September 2012 with core bank debt £20m lower. The share price fell over five per cent in morning trade. NR