31st Mar 2015 08:15
LONDON (Alliance News) - Home shopping and education supplies company Findel PLC on Tuesday said it expects pretax profit for its recently-ended financial year to be ahead of the year before but to miss market expectations after a weak final quarter for its education business.
Findel Education suffered a difficult year in the 12 months to March 27, with second half sales proving particularly challenging, the company said. Full year sales were down around 6.5% year-on-year, while sales in the final quarter fell 9.2%. Findel said the impact on profit from the sales declines has been mitigated in part by cost cutting, but operating profit in the division still fell year-on-year.
It said it expects conditions to remain difficult for the Findel Education business this year, with a recent report from the Institute of Fiscal Studies indicating both major political parties would implement real-term reductions in spending levels per student if they win the General Election.
Findel said its Express Gifts unit saw total sales rise 4.8% in the financial year, with product sales rising 6.6% for the year and 7.9% in the final quarter. The gross margin in the division declined slightly, however, due to changes in its product mix. Financial services revenue in the unit fell due to an improvement in the quality of its credit receivables portfolio, but this was offset by a fall in bad debt charges.
Its Kitbag online sports equipment store recovered well in the year, Findel said, with a record Christmas trading period and tighter control in the division on product margins and stock levels. Sales for the year are up 10.5%, though the division will still report an operating loss for the year. The strategic review in the division is ongoing, Findel added.
The company sold its Kleeneze network marketing company to CVSL Inc for GBP3.4 million in the year, with the deal completed on March 24. Findel will publish Kleeneze's results as a discontinued operation, but year-on-year sales fell 21% in the unit and it produced an operating loss.
Findel said that while it expects its pretax profit for the financial year to be ahead year-on-year, it will be slightly lower than market expectations, primarily due to the weak performance in the Education business in the fourth quarter.
The group expects Findel Education to produce a flat profit performance in its 2016 financial year at best. It also expects Express Gifts to face challenges from the impact of a stronger dollar on import prices, though it still expects similar operating profit growth in the division to this year.
Findel was expected to report a pretax profit of GBP27.5 million in the year that just ended, according to a consensus of three analysts on Morningstar. Pretax profit was set to rise to GBP35.0 million in the current financial year, according to the data.
The company had reported a pretax profit before exceptional items of GBP22.0 million in fiscal 2014, up from GBP11.8 million a year earlier.
Findel shares were down 6.2% to 236.37 pence on Tuesday morning, one of the worst performers in the FTSE All-Share index.
By Sam Unsted; [email protected]; @SamUAtAlliance
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