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Footballing successes for Kitbag prove the bright spot as parent Findel narrows its losses

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Footballing triumphs in UEFA’s Champions League, as well as the FA Cup and Premier League helped Kitbag, the replica sports kits seller, to increase its profits in its latest financial year.

Kitbag , which sells online and through shops, has deals to sell kit for FC Barcelona and Manchester United, the finalists in this year’s Champions League, as well as for the winners of the FA Cup, Premier League and the Copa del Rey.

Today its parent company Findel, announcing its full-year results, said that the sporting victories had led to strong trading at Kitbag, which signed new online contracts with UEFA for the Champions League and European Championships in May, and was the only one of Findel’s five businesses to increase its profits in the year to March 2011.

Thanks to a raft of new contracts, including multichannel contracts with Manchester City and Nottingham Forest, Kitbag saw its operating profits rise by £144,000 to £1.87m from £1.72m at the same time last year, while revenues rose by 20.1% to £58.0m. Since 2008 its revenue has more than doubled.

In its statement to the London Stock Exchange, Findel explained why these multichannel contracts, which include sales through shops and online, were good news for it. “The main benefit of the multichannel contracts for Kitbag is an ability to achieve higher overall product margins through having greater control over the sales process – although this benefit is partially offset by the higher costs of operating the related stored, particularly in the first years of operation.” Gross margins in 2011 rose to 46.1% from 43.4% as a result.

However, Findel’s other home shopping businesses both saw a dip in profits. Operating profits fell £3.7m to £16.5m at Express Gifts, which includes Studio, Ace and Health and Home Shopping, after the company tightened its underwriting standards for new credit customers, reducing its customer base as a result. Doorstep sales company Kleeneze saw operating profits fall £2.0m to £4.4m after a year in which challenges included bad weather and “customer caution in doorstep spending.” Profits at Findel’s education supplies and healthcare businesses were also down.

Overall, Findel said revenue dipped by 2.6% to £532.6m in the year to April 1 2011 from £547.0m at the same time last year. Pre-tax profits before exceptional and terminated operations fell to £7m from £11.7m at the same time last year. Bottom-line losses, after exceptional costs of £4.4m and losses from terminated operations of £4m, narrowed to £1.4m from £74.8m last time. Those terminated operations include Confetti, I Want One of Those and the Webb Group, whose sales completed during the year.

Findel says it now has headroom for a turnaround strategy thanks to “transformed” funding. Bank debt had to be renegotiated during the year after discovery of an accounting error in the education supplies division and equity was also raised through a rights issue. The financial problems had led to difficulties gaining credit from suppliers. But chief executive Roger Siddle said the turnaround now in prospect would not be a “quick fix – our expectation is that it will take up to three years to achieve our goals.”

Siddle said: “These results show a remarkably resilient performance from our businesses against a difficult consumer backdrop and the unavoidable disruption caused by the long period of financial uncertainty that the group has been through.

“Our five strong businesses and our reinvigorated management team are now firmly focused on the future. The restructured balance sheet gives us the stability we need to deliver on the full potential plans we outlined. It is early days but we are confident we now have in place the right platform to deliver a much improved operational and financial performance and hence rebuild shareholder value.”

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