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Christmas comes early

Update | General Retailers | 29 Nov 2017

Findel’s management team is seeing early success from its self-help measures. While strongly positive interim results are partly the result of timing issues, the underlying point is that sales growth from an early Christmas launch has already been banked, improving visibility. The change of strategy at the Education division is also bearing early fruit, and at 66% online, Studio continues to make steady progress to becoming a fully online retailer. Neither that nor management’s progress on strategy is reflected in a P/E rating of around 10% of pure-play online retailers.


Well positioned going into the season

Flash note | General Retailers | 29 Aug 2017

Findel reports that its first 20 weeks, trading is in line with expectations in both businesses: Express Gifts and Findel Education. The pre-Christmas retail season and the new school year will respectively be the test for both divisions, but initial indications look strong. We retain our forecast 22% FY18 EPS growth and our 324p valuation with increased confidence.


Positive momentum

Flash note | General Retailers | 13 Oct 2016

Findel is on target to meet FY17 profit expectations, so we leave our estimates unchanged. However, we are encouraged by Express's strong momentum and Education's improved performance in Q2. Our SOTP valuation remains unchanged at 240p. The potential in Express and the option on consolidation opportunities in Education appear undervalued.


Outstanding success with online-led strategy

Outlook | General Retailers | 08 Jun 2018

Findel (FDL) is seeing outstanding success with its online-led value retail strategy. FY18’s 21% PBT growth includes a strong Black Friday and Christmas campaign. However, underlying independent market share growth puts FDL on the right side of a difficult sector. Also, considering that customer redress has been bottomed out, Education has been stabilised and that core net bank debt (excluding receivables-related debt) is close to net positive, most of the negatives in the investment case have been removed. FDL appears to have turned the corner and our revised valuation suggests significant valuation headroom.


Strong finish - Forecast upgrade

Update | General Retailers | 18 Apr 2018

Findel indicates that it will finish FY18 at the top end of current market expectations. This suggests that both the online strategy and the turnaround strategy at Findel Education are on course. We upgrade FY18 profit forecasts to the new guidance level and retain our 312p valuation which, at an FY18e P/E of 10.5x, is modest for a company with an online presence of 72% and 13% PBT CAGR 2017-19e.


Online performance, terrestrial valuation

Flash note | General Retailers | 30 Jan 2018

In a retail environment dominated by customers switching to online shopping habits, Findel is reaping the benefits of the trend. Q3 results confirm underlying market share growth typical of online retail peers. However, its P/E rating remains on a par with terrestrial high street chains.


An online retailer in waiting

Outlook | General Retailers | 18 Jul 2017

The jump in online sales mix from around 56% a year ago to 63% in FY17 is significant in showing Express Gifts’ rapid progress towards becoming a pure-play online business. New management confirms the strategy and meanwhile has drawn a line under legacy issues, while the balance sheet is adequate to deal with these and the operation’s development needs. We are materially raising our valuation to 324p and believe that, as Findel moves more fully online, there will be further upside to its revenue growth and, consequently, share price.


Express opens up

Update | General Retailers | 07 Apr 2017

Further strengthening in customer recruitment bodes well for Express sales volumes in FY18, while the short-term margin impact is essentially a side-effect. Chairman Ian Burke's appointment of Phil Maudsley, the longstanding Managing Director of Express Gifts, to the CEO position indicates where the strategic emphasis now lies. Our valuation of 236p is not demanding at an FY18e P/E of 8.8x.


Customers boarding Express

Update | General Retailers | 27 Jan 2017

Findel has reported further encouraging progress in its largest business, online value retailer Express Gifts. Customer acquisition is progressing faster than expected. While this imposes a drag on short-term profits growth, it enhances longer-term potential. This is not fully reflected in the current ratings, which result in a FY18e PEG ratio of 0.8x. Our sum-of-the-parts (SOTP) valuation is 265p.


Encouraging sales progress at Express

Update | General Retailers | 07 Dec 2016

Findel’s largest business, Express Gifts, posted strong revenue growth in H1 and has sustained the trend into H2. Currency headwinds will cause a pause in profit growth in FY18e but plans to continue building the customer base and revenues are encouraging for the medium term. Education, now showing signs of improvement, will continue to rely on self-help in a challenging market.


Express picking up speed

Update | General Retailers | 03 Aug 2016

The investment case for Findel is that its largest business, Express Gifts, has substantial growth potential that should yield operational leverage benefits as it progressively reaps the rewards from investments in distribution, systems and financial services made in recent years. Given that, the strong trading performance reported at last week's AGM is very encouraging. Despite short-term profit offsets from currency moves and continued weakness in Education, the longer-term potential appears under-appreciated.


Express steaming ahead

Outlook | General Retailers | 21 Jun 2016

Several valuation metrics and our sum-of-the-parts analysis suggest that the market undervalues Findel's potential. To close the valuation gap, management simply needs to continue on its current path. The increasingly online retailer Express Gifts has resumed growth. Turning around Education will take time in a difficult market, but existing initiatives should see FY18e profits leap. Meanwhile, core net debt remains well controlled and is set to reduce further.