Findel turns a corner

Strip out exceptional costs and adjusted pre-tax profit on continuing operations rose more than 50 per cent to £12.9m. Mail order business Express Gifts was the strongest performer. Sales grew 13 per cent to £263m, and underlying operating profit increased 16 per cent to £21.8m, helped by an improved product range and tight cost control.

Although still loss-making, sports merchandise retailer Kitbag made a recovery. Sales grew 16 per cent to £70m, driven by renegotiating royalty rates, while a 1.4 percentage point improvement in the gross margin helped narrow losses markedly. A pipeline of new contracts includes the NBA and Tour de France. Findel's education supplies business also recovered, thanks to self-help initiatives, and a new contract to supply all Scottish LEA schools could boost sales by £3m in 2014.

Admittedly, Kleeneze disappointed due to a reduction in door-to-door salesmen and smaller order sizes, but cheaper catalogues and a broader product range were introduced last month to tackle these problems. In April, Findel sold its healthcare division, netting £18m to pay down debt.

Broker Peel Hunt expects current year adjusted pre-tax profit of £19.7m to drive underlying EPS a third higher to 17.2p.