Home shopping retailer Findel will stop recruiting higher-risk new customers to its credit business and focus on driving revenues from its established customer base, after a “disappointing” year.
Findel chief executive Patrick Jolly said the retailer, which warned on profits in April after an unexpected increase in default rates by customers in March, was “adopting a different strategy”.
Findel, which has 1.53 million customers of its credit division with a 70 per cent retention rate, will redirect a proportion of its recruitment marketing spend to encourage larger and more frequent orders from existing customers, rather than on signing up higher-risk, younger customers, who are more likely to default on payments.
Chairman Keith Chapman said: “I believe that our integrated product and credit model, aimed at a predominately lower demographic, has much to commend it in times of economic uncertainty, where banks have retrenched from providing unsecured personal lending. However, we also recognise that such economic conditions bring with them a higher risk of default, particularly from customers who do not have a trading history with us.”
In the year to March 31, benchmark operating profit at the home shopping credit business, which accounts for 40 per cent of sales, increased 3 per cent to£42.8 million, despite the necessity for additional bad debt provision. Sales rose more than 5 per cent to£245.1 million. Sales for the first six weeks of this financial year are up 5 per cent on the same period last year.
Benchmark operating profit for ongoing businesses in the home shopping division increased to£50.3 million on sales up 22 per cent to£403.5 million.
In the year to March 31, group pre-tax profits, including one-off costs, were£34 million, up from£16.4 million the previous year. Sales from continuing operations were up 16 per cent to£634 million.
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