Findel hails Studio arm as affordable fashion scores in UK but growth slows
The increasing importance of price-conscious clothing e-tailers to the overall UK fashion sector was highlighted on Wednesday as diversified group Findel reported its interim results with growth in its clothing offer and potential for more to come.
But the company said that adjusted pre-tax profit rose only 2.3% to £11.6 million with revenue up 1.7% to £228 million in the six months to the end of September, so Findel still has some hurdles ahead.
The figures came as its active customer base stood at 1.9 million at the end of September, up from 1.8 million just six months earlier, and as clothing (which is one of its most frequently purchased categories) was a standout performer.
And it reported a "strong performance post-period-end with “record trading levels in the three weeks to Black Friday,” despite Q2 having been “quieter” than it had hoped for.
The company’s Express Gifts e-tail unit operates the Ace and Studio arms that include a big multibrand fashion and beauty offer.
Its strategy to “grow the Studio customer base and increase our customers' spending with us, particularly on clothing ranges, supported by our flexible credit offer, is working and provides the basis for sustainable medium-term profit growth,” it said.
The company said that 1.3 million of its 1.9 million customers now buy clothing from its webstores but the category still only represents around 30% of its total sales "giving significant opportunity for further growth.”
CEO Phil Maudsley said: “This has been a period of continued progress and profit growth, driven by Studio's hugely attractive customer proposition as a digital-first, value retailer. In particular, I am delighted to have seen more customers than ever choose to shop with Studio. More and more new customers are now recognising our value, while our existing customer base are shopping more frequently and across an increased range of products.”
But analysts were more cautious in their assessment. Sofie Willmott, Senior Retail Analyst at GlobalData, said: ‘‘Although Findel operates in the areas of the UK retail market that are outperforming, its growth slowed in H1, up against tough comparatives. However in the 10 weeks to 23 November, Findel has seen performance improve owing to its Black Friday campaign.
"Express Gifts appeals to consumers as it stocks well-known brands such as Quiz, Converse and Nike while also offering credit options to cash-strapped shoppers. 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."
She added that "18.8% of clothing & footwear online shoppers used a credit option to purchase this sector online in the last 12 months, according to GlobalData’s E-retail survey, with the most popular retailers used being Amazon, Next and ASOS. 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 USP.''
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