DURING MIDAS SHARES: Christmas has come early – if you are looking for a festive investment
Joanne Hart, financial post on Sunday
With less than ten days to Christmas, this week is the time for many retailers, struggling to achieve their goals and to achieve substantial revenue growth.
Lancashire-based Findel is in a rather different position. A retailer with value that was online and through catalogs increased by 13 percent in the past 12 weeks compared to the same period last year.
The company is growing rapidly and chief executive Phil Maudsley is determined to continue on the same lines, more than doubling retail sales over the next five years, from £ 400 million to £ 1 billion.
Boom: for Lancelire-based Findel, sales of its products were 13 percent higher than in the past 12 weeks, compared to the same period last year
Nevertheless, Findel shares are affected by the general malaise on the stock market and concerns about the retail sector in particular. In July the price was £ 3.02. Last week, the shares closed £ 1.77. This does not reflect the performance of the company or its prospects and the shares should recover in the coming months.
Findel has a checkered history. Originally a greeting card and gift wrapping company, it was expanded extensively in the late 90s and early 2000 to save money on the stock market and to seek help from its banks after the financial crisis. The company carried out a partial recovery, but until recently still worked with old problems, not least the PPI scandal, where it had to compensate thousands of customers who were wrongly sold insurance products in the past.
The group also has a high-profile shareholder, Sports Direct from Mike Ashley, which owns 29.9 percent of the shares. Although Maudsley is seen as a problem by some observers, the relationships with the snarling Ashley are utterly warm and can even benefit Findel in the future.
Maudsley took over in April 2017 and has been working in the company since 1987. A robust Northerner, he is determined to focus the company on its core strength as a value retailer.
Today, Findel consists of two divisions – a retail company that operates under the brand Studio and a subsidiary company for educational products, Findel Education.
Studio, which generates most of the revenue and generates more than 90 percent of the profits, sells a very wide range of products – clothing, kitchenware, furniture, household items and a variety of Christmas related paraphernalia, trees, decorations and much children's toys.
The average household income of customers is between £ 25,000 and £ 30,000, they are small buyers and they do not intend to pay too much.
Growth: Today Findel consists of two divisions: a retail company that operates under the brand Studio and a subsidiary company for educational products, Findel Education
Findel has had some difficult times, but Maudsley and his team strive for growth.
The company now offers customers a tempting mix of value-based e-commerce with additional credits and also restores the training company. V
More than enough Andy Brough from Schroders is a big fan, who recently brought his share to almost 19 percent, while six members of the board bought shares last month.
For £ 1.77 the shares are a purchase.
Initially, the company focused on the sale of catalogs. Now more than 70 percent of customers shop online and the share is rising fast. The shift to online is beneficial at various levels. Customers tend to buy more as soon as they see the range of goods on the website, the service is nicer and Findel finds valuable information about what customers like and what they do not.
The website also attracts hundreds of thousands of new customers. The number of customers has grown by 40 percent to 1.9 million in the past two and a half years and Maudsley believes they can easily reach 4 million in the medium term.
At the same time, he wants to increase the amount they spend. The average annual spend per customer is around £ 250, less than half that of other value-based retailers. Investment in the website, advertising and word-of-mouth advertising should make a big difference in the coming years.
Findel also offers its customers credit and more than half of them take it. This not only yields a lot of profit for the company, it is also highly appreciated by shoppers with cash.
Education has been neglected in recent years, but Maudsley is taking steps to get it back on its feet and early signals are encouraging. In the course of time, the division is likely to be sold, allowing Findel to fully focus on the retail offer. Brokers predict sales of £ 506 million and profits of £ 28.5 million in the year to March 2019, rising to £ 537 million and £ 31 million in 2020.