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Findel expects full year profit to reach top end of market forecasts after solid third quarter sales

“Despite the uncertain economic environment, the board believes that the group now has strong momentum as we move into the final months of the financial period,” the company said

Findel
Shares jumped more than 5% in lunchtime trading

Online retail and education firm Findel PLC (LON:FDL) expects full-year pre-tax profit to reach the top end of market forecasts after record sales and strong margin performance in the lead up to Black Friday.

Sales jumped 10.9% in the third quarter and 6.5% in the year to date.

READ: Findel shares gain as it reports growth in first-half profits and record Black Friday sales

The Studio business, formerly Express Gifts, generated sales growth of 13.7% in the third quarter while product and financial services revenues increased 13.6% and 14.2%, respectively.

Findel said Studio was boosted by demand for personalised toys and nightwear over the Christmas period.

The company added that Studio’s product margins remained strong throughout the season and continues to expect full-year growth of 125 basis points (bps) to 175bps.

“While January is typically a quieter period for the group, the early weeks of the new Spring/Summer season for Studio have shown an encouraging response from customers, with homewares and garden ranges performing particularly well and in line with our expectations,” Findel said.

The group expects 2019 pre-tax profit at the upper end of consensus estimates of £26mln to £28mln, up from £24.4mln the previous year.

“Despite the uncertain economic environment, the board believes that the group now has strong momentum as we move into the final months of the financial period,” Findel added.

Shares rose to 5.5% to 211p around noon.

Emily Salter, retail analyst at GlobalData, said: "The bulk of the company’s revenue comes from its Express Gifts division, which started trading as Studio Retail Limited during this period.

“The rebrand of the online proposition is part of the retailer’s plan to fully evolve from a catalogue-based business selling gifting products to a ‘modern, online value retailer' with a broad product range.

“Findel must make sure that customer perceptions align with this and that the website is appealing if this rebrand is to be successful.”

Salter suggested one area the retailer could develop is product personalisation, which proved popular on items such as toys and nightwear for Christmas gifts.

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