Findel edged back towards the black in the first half as pre-tax profits and sales rose.

Pre-tax losses before exceptional items narrowed from £5.6m to £4.6m in the 26 weeks to September 28.

First half sales rose to £275.1m, up from £254.6m in 2011. Current trading in the eight weeks to November 23 revealed sales were up 7.7% on last year.

Sales in its Express Gifts division increased 18.1% in the half to £110.1m, Kleeneze sales fell 7.1% to £24.4m and Kitbag sales rose 11.9% to £33.7m ahead of the crucial Christmas trading period.

Sales at its Education supplies division decreased 5.3% to £59.2m and rose 13.4% to £43.4m in its healthcare business.

The group said “there is still much work to do” on its turnaround plan and that some businesses had progressed further in the strategy than other.

Findel said: “Our businesses are not yet operating at their full potential and the continuing challenges of the economic environment make progress at times slower than we would like.”

Kitbag’s operating loss improved to £700,000 in the first half, up from a loss of £1.8m last year due to the renegotiated contracts. It has also secured key contracts with Sunderland FC, the French Open tennis tournament and renewed its contract with European Champions Chelsea FC.

Findel said: “Current trading is 20% ahead of prior year [at Kitbag], with margin improvement trends maintained. However, the important Christmas peak trading period is still to come and, as we are yet to see a sustained Christmas pick-up, we are cautious about the remainder of the year.”

Group chief executive Roger Siddle added: “The group’s trading performance during the first half confirms that our turnaround actions are taking effect.

“We remain very encouraged by the performance of Express Gifts, on track again for a strong Christmas, with divisional current trading 9% ahead of a strengthening prior year comparator. In addition, our Kitbag and Education businesses show evidence of recovery in performance.

“Our focus is on continuing to drive forward our turnaround plan, to maintain this trend of improving results into the second half and beyond. Notwithstanding on-going pressure from reduced consumer spending and cost inflation, we believe we are well placed to continue to deliver on our plans.”

Siddle said that since JJB’s collapse into administration last month the sector’s “share of voice” has been reduced as the retailer had been marketing heavily.

He added: “We are cautious about Christmas for Kitbag, we are not yet seeing the Christmas pick up. The later it comes the more aggressive competition will be. Although JJB is no longer out there does not mean there’s no competitors.”