Home shopping retailer Findel has announced a £81m capital raising to accelerate its debt reduction plans and revealed a slump in full-year pre-tax profits.
The retailer will issue 200 million shares by way of a firm placing and 204.3 million shares through a placing and open offer, both at an issue price of 20p a share. The price is a discount of 51.5 per cent to the closing price of 41.25p a share on July 23. The retailer has also amended its banking facilities.
Findel chairman Keith Chapman said: “This £81m capital raising allows us both to accelerate the group’s debt reduction plan and enter into cheaper and less restrictive bank facilities. This, together with the company’s focused strategy of stability, efficiency and cash generation, means we are better capitalised to operate in the current economic environment and to emerge well placed for future growth”.
In the year to end of April 3, benchmark pre-tax profits at Findel dropped to £33.4m from £50.6m the year before. Sales fell from £610.6m to £599.8m.
Current trading is in line with expectations according to the retailer, with group sales down 4 per cent in the 15 weeks to July 17.
The retailer said that it is on track to deliver £100m of cash generation by March 31, 2011. Stock levels were reduced by £19m in the year and £8m of savings achieved by the closure of Letterbox and The Cotswold Company.
The retailer has also acquired the remaining 70 per cent of The Webb Group not owned by Findel, which includes home entertainment supplier Choices Group UK and mail order business Webb Ivory Burton.
Sales at the home shopping division at Findel fell 4 per cent to £366.7m compared with £380m the year before. Benchmark operating profit was £32.2m, down from £48.9m last year.
The retailer will expand its clothing offer to comprise non-critical fit items with better margins and low rates of customer returns. The retailer is also in the advanced planning stage for a single 55,000sq ft storage warehouse in Accrington, which would enable it to release five out of its seven existing warehouses, saving £3.3m a year. It is forecast that the new site’s picking system will save £2.5m a year.