Findel raises equity and announces cost-cutting plans


Findel, whose brands include the Studio and Ace credit-based mail
order catalogues, websites IWantOneofThose.com and Kitbag.com,
and educational supplies cataloguers Hope Education and GLS, last
month raised £81 million by way of a rights issue. And after
months of rumours, the company confirmed in its annual results
that it is focusing on its home shopping and education-supplies
units.

While the City is speculating that Findel is putting its
healthcare division up for sale, the company did not say so in
its statement. Nor has it confirmed that it has a buyer for its
Kitbag business, which has been on the block since May. As of
mid-August, JD Sports Fashion was believed to be close to
acquiring the sportsgear etailer.

For the year ended 3rd April, Findel reported that sales from
continuing operations were £599.8 million, down 1.8 percent
from £610.6 million the previous year. Benchmark profit
before tax was £33.4 million, down 34 percent from
£50.8 million. Findel intends to use the funds raised by the
equity issue to reduce its debt.

The company also announced that it had acquired the 70 percent of
the Webb Group, a supplier of home entertainment products, it
didn’t already own. It paid just £3-£1 each to the two
management shareholders, Bernard Kumeta and David Robinson, and
to the trustee of the Webb Employee Share Ownership Trust. The
Webb Group will continue to operate with the current management
at its helm.

Among other changes, this autumn will be the first time Findel’s
credit-based home shopping business will include a significant
apparel and accessories offering-more than 240 pages-in its
catalogues. The Ace and Studio books previously focused on gifts
and homewares. The new range will “principally comprise
noncritical fit items which tend to have attractive margins, low
rates of customer return and do not require the existing
infrastructure to be reconfigured to provide for hanging
space,” the company said in a statement.

Findel also says that plans are “well advanced” for
the construction of a 55,000-pallet, high-bay bulk storage
warehouse to supply the home shopping division’s major
distribution site in Accrington, Lancashire. The completion of
this warehouse will enable Findel to close five of its seven
other warehouses, saving around £3.3 million a year. The
construction and commissioning of the new warehouse is expected
to take 18 months.

At the educational division, Findel has installed a new computer
system, moved into new offices, and rationalised its SKUs, moves
that it estimates will help it save £4 million a year from
the next financial year. The company believes it can achieve
another £2 million in savings, though it has not specified
the areas where these “efficiencies” will be made.
Overall, Findel says, it is “on track to deliver £100
million of cash generation by March 2011”.

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