Profit warning at Findel knocks shares

Findel, one of Britain’s biggest home shopping groups, said profits will be hit by an increasing amount of customers falling behind on payments. Following the profit warning, shares in the company fell by 35%.

Just a fortnight ago, the company which sells clothing and household goods, said that it had achieved record sales in the last 12 months. However, it has now warned investors that it was having to set aside £5 million more to cover bad debts among its customer base.

A spokesperson for the company said as a consequence, the board believes that the group profit before tax for the year ended 31 March 2008 will be below its previous expectations.

Approximately 1.5 million Findel customers buy their goods using credit. The West Yorkshire-based company blamed the higher levels of bad debt on the deteriorating economic climate.

Its brands include Letterbox, Kitbag and the IWantOneofThose. Speculation about the group’s financial health has increased recently after sharp falls in the share price.

A retail analyst at Kaupthing said that there was no explanation for why the shares had fallen and predicted a rally in the stock.

The company’s other operations include the sale of educational supplies to schools and colleges and medical equipment for hospitals.

Story link: Profit warning at Findel knocks shares