Findel profit to be at upper end of market expectations

Findel said on Friday that full-year pre-tax profit is likely to be towards the upper end of current market expectations following a strong third-quarter performance from its main customer-facing brand, Studio.

In an update for the 15 weeks to the end of December 2018, the online value retail and education business said group revenue rose 10.9%. For the year to date, revenue was up 6.5%.

Revenue from Studio - formerly Express Gifts - was up 13.7% in the third quarter and 9% YTD, while revenue in the education segment was down 8.9% and 5.2%, respectively.

Findel said customers were particularly attracted by the product personalisation that Studio offers, with toys and personalised nightwear proving particularly popular during December as Christmas gifts.

As a result of the strong performance from Studio, the group now expects pre-tax profit for FY19 to be at the upped of analysts' range of between £26m and £28m.

Chief executive officer Phil Maudsley said: "I am delighted with the strong performance of Studio in its peak trading period. This is testament to the increased strength and consumer recognition of our online value retail offer. We delivered record-breaking sales and strong margin performance in the weeks leading up to Black Friday and consequently we now anticipate full year PBT to be towards the upper end of current market expectations."

Core net debt at 31 December was circa £54m, down by around £23m from December 2017, in part due to the stronger trading performance seen during the third quarter and improvements in working capital management throughout the season.

Findel said that while January is typically a quieter period, the early weeks of the new Spring/Summer season for Studio have shown an encouraging response from customers, with homewares and garden ranges performing particularly well and in line with its expectations.

Paul Hickman, analyst at Edison Investment Research, said: "This further improvement in trading strength in the late Christmas period marks Findel out as one of the winners in a very mixed retail landscape. The combination of a serious and wide-ranging value offer, with responsible consumer credit support, appeals to value-conscious customers who are managing household finances.

"The company is clear of terrestrial retail issues, while online ordering has hit a new level of 78% this Christmas."