According to broker KBC Peel Hunt, the news illustrated the fact that “management teams are not necessarily fully aware of issues surrounding credit”.
KBC reduced its profit forecast for the year to March 2008 by£8 million to£57 million. The broker added that, despite Findel’s strong online business, “negative sentiment surrounding the sub-prime debtor book, gearing and management credibility will prevail over the share price”.
Other home shopping companies’ shares took a battering, as Findel’s warning increased City fears over bad debt in the sector. N Brown’s shares dropped, despite high expectations from many analysts, ahead of its preliminary results next week. Next’s shares also dipped.
Findel will report its full-year results on May 15. The retailer’s board believes that, despite concerns over bad debt, profits will be ahead of last year and there is opportunity for growth in the new financial year.