School weather closures prove drag on Findel sales

The company, which moved from Burley-in-Wharfedale to Cheshire last year, said it had seen a significant hit following the closure of up to 25 per cent of UK schools for a fortnight in December.

Findel also provided details of its £80.5m rights issue, first announced in November, to help fund an ambitious investment programme for its five core businesses.

The group said that its education supplies division had been heavily impacted by snow conditions. Sales in the 17 weeks to January were down 11 per cent.

Findel said the profit impact of this sales decline was mitigated by the fact that December is traditionally one of its slower months.

The home shopping businesses saw a 1.7 per cent fall in sales during the 17-week period.

The impact of poor weather conditions was relatively limited within Express Gifts during the Christmas period, but it has now seen an effect on sales caused by a backlog of catalogue deliveries within the Royal Mail network during early January 2011. Express Gifts’ sales for the period were 4.3 per cent.

Kitbag, which runs the online retail operation for a number of football clubs including Manchester United, Chelsea, Real Madrid and Barcelona, had a record December, with sales almost 25 per cent higher. Kitbag sales were up by 18 per cent over the 17-week period.

But sales at cleaning products division Kleeneze fell nine per cent in December after the poor weather conditions prevented distributors from reaching their customers.

Findel said that in the short term it continues to face a number of challenges, both in maintaining supply chain effectiveness given current financial constraints and the more general external economic environment.

“However, the proposed financial restructuring announced today will provide the group with the secure funding base and capital availability required to implement our full potential review programme and should give confidence to all stakeholders,” the group said.

Analyst Andrew Porteous, at Evolution, said: “The announcement of an £80m capital raising, to reduce net debt and invest in the business, should be seen as encouraging.

“The statement highlighted a tough Christmas. However, this was not unexpected given a similar update recently from peer N Brown.”

Findel intends to raise £80.5m (£75m net) through a five for two rights offering at 6.54p. Net debt will be reduced by £110m as a result of the raising while the business will benefit from £35m of investment.