Adjusted pre-tax profit rose to £11.6mln in the six months to September 28 from £11.4mln a year ago as revenue gained 1.7% to £228.2mln.
The Express Gifts division, which includes online value retailer Studio, delivered a 1.2% rise in product revenue. Findel said the unit’s revenue was weaker than expected due to reduced marketing activity but year-to-date product sales growth has accelerated to 6.2%. In the 10 days leading up to Black Friday, sales rose by a record 12%.
The active customer base of Express Gifts grew to 1.9mln from 1.8mln at the end of March.
Online customer orders on a rolling 12-month basis rose to 72% from 66% the same period a year ago.
The product gross profit margin, however, narrowed by 50 basis points as the group lost £1.1mln in contributions from former subsidiary Kleeneze, which continued to use Express Gifts' distribution facilities until August 2017 following the disposal of the network marketing business in 2015.
Education revenues hit by loss of sales from Sainsbury's scheme
Revenue in the company’s education business fell 4.4% due to loss of sales from J Sainsbury plc’s (LON:SBRY) ‘Active Kids’ scheme, which gave vouchers to nurseries, schools, scouts and sports clubs that could be redeemed for purchases of sports and cooking equipment and to pay for sports activities.
The core UK customer base of the education division rose 5% in the year to September and online ordering levels have jumped to 52% from 26% last year but the growth was supported by price discounts to boost demand. Price reductions for online purchases dragged the gross profit margin down 250 basis points.
Findel is trying to turn around the education business by streamlining its head office operations to cut costs as it focuses on transitioning the business online.
The company said it was confident that its strategy will improve the prospects for the business over the next two to three years.
Findel 'pleased' with start to second half trading
Following a quieter second quarter, the group said trading over the past 10 weeks been strong, led by record Black Friday sales at Express Gifts.
"We have been pleased with the start to the second half, buoyed by a record-breaking Black Friday period, and we are well placed as we head into Christmas,” said chief executive Phil Maudsley.
“Our expectations for the full year remain unchanged."
Shares rose 2.7% to 226p in morning trading.
Sofie Willmott, senior retail analyst at GlobalData, said Findel should not assume that the strong start to the second half will guarantee a solid result over the key Christmas trading period given the discounting seen in the UK.
"Express Gifts, which trades as Studio and accounts for the bulk of Findel’s revenue, appeals to consumers as it stocks well-known brands such as Quiz, Converse and Nike while also offering credit options to cash-strapped shoppers," Wilmott said.
"But competition is increasing with more retailers offering, and heavily promoting, their credit offer giving those shoppers using credit options more choice of retailers to purchase from."
Willmott said Express Gifts must find other ways to differentiate its proposition in the market given that plenty of other retailers with a wider customer base are encroaching on its unique selling point.