Home shopping group Findel’s decision to close its loss-making Cotswold Company and Letterbox brands has been welcomed by the City.
The decision, which followed a strategic review announced in February, will eliminate losses and costs of £8m in 2008/09.
Findel will also close central administration functions associated with its group of cash-with-order businesses, Findel Direct, and transfer any remaining functions to its existing home shopping business.
The initiative will involve a cash cost of less than £1m. However, impairment charges will total £9m for Cotswold Company and £8.6m for Letterbox. Further asset write-downs of about £6m will be made against Findel Direct.
Findel chief executive Patrick Jolly said: “This action is in line with our strategy of improving the cash performance of the business with the aim of helping to reduce debt. We remain confident of achieving our strategic cash generation plans by our target date of March 2011.”
Joint house broker Numis analyst Nick Coulter called the decision “eminently sensible” but said he would adopt a “more conservative stance with respect to the likely trends in the credit home shopping operation in 2009/10”. He expected “the broadly flat financial income run rates likely to trend towards the lower product sale trends”.
Singer Capital Markets analyst Matthew McEachran, also joint broker, said of the closures: “Although disappointing, the elimination of significant future trading losses and administration and management costs is in line with the strategy to improve cash performance and reduce debt.”
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