Price cuts helped multichannel retailing business Express Gifts deliver a 4.9% increase in sales in the first half of the year. Its owner Findel, the home shopping group, said today that this was an early result of its three-year turnaround programme, which had helped halt a sales decline at its continuing businesses for the first time in three years.
Findel, which also owns football strip supplier Kitbag , as well as home distribution company Kleeneze and education and healthcare supplies businesses, has sold off businesses including I Want One of Those and wedding list site Confetti in recent years to concentrate on making its core businesses profitable.
Today, as it reported its first-half results, Findel said Express Gifts, which sells through catalogues and online through Studio, Ace and Health and Home Shopping, had seen a 4.9% rise in turnover in the first half of the year, to September 30, while Kitbag’s sales were up by 15.3%. Since the end of the half-year group sales have continued to rise: they were up by 2.9% in the eight weeks to November 25, with Express Gifts up by 10.9% compared to the previous year.
In the half-year to September 30, total revenues fell to £254.6m from £264.0m last time, reflecting the group’s exit from its previous business.
Despite delivering rising sales, both Express Gifts and Kitbag turned in an operating loss of around £1.8m each, though operating profits at Findel’s other businesses meant the group operating loss was kept to £0.6m, down from a profit of £6.7m at the same time last year. The costs of borrowing and exceptional costs brought the group to a total loss of £10.6m in the period, down from a loss of £15.0m last time. After those costs and revenues were discounted, the loss was £5.6m in the half-year, up from £3.1m at the same time last year.
Chief executive Roger Siddle said: “We are halfway through the first year of our full potential plan and our focus is on consolidation and recovering from a period of extreme difficulty for the group.
“In what has been a particularly challenging economic environment we are encouraged by the development of the group. We are particularly pleased that Express Gifts, our largest business, is on track for a very strong Christmas with current trading 10.9% ahead of last year.”
He said the board believed the results of its investment and changes to the business, part of a three-year Full Potential plan, would start to be seen in the second half of the year through “a trend of improving results”. At Express Gifts, for example, a move to cut prices by absorbing VAT increases and reducing target profit margins, as well as improving internal systems in response to “declining response rates and customer numbers” had delivered a sales upturn of 4.9%.
At Kitbag, the football strip supplier, which sells through shops and online, the emphasis is on moving towards profitable growth – and away from a pattern of fast growth that has not been reflected in “appropriate” profits. The company appointed Andy Anson, the former leader of England’s World Cup bid, as chief executive of Kitbag in June.
In its financial report the company said today: “The Full Potential plan is a three-year turnaround and not all of these challenges can be fixed in a short time frame. We have, however, made good progress in the first six months.”
