Findel Stock - Express Is Picking Up Speed
Edison | Aug 03, 2016 05:52AM ET
The investment case for Findel (LON:FDL) is that its largest business, Express Gifts, has substantial growth potential that should yield operational leverage benefits as it progressively reaps the rewards from investments in distribution, systems and financial services made in recent years.
Given that, the strong trading performance reported at last week’s AGM is very encouraging. Despite short-term profit offsets from currency moves and continued weakness in education, the longer-term potential appears under-appreciated.
Strong performance within Express
Express’s plans to grow customer numbers and revenues bore fruit in the first 17 weeks of FY17. Investments in gross margin and advertising costs delivered 14.5% product sales growth. Financial Services’ revenue growth was also strong, benefiting from the product sales growth and the roll-out of risk-based pricing.
Realizing the substantial potential within Express requires management to continue to build its customer base and revenues. Despite the margin investment, in our model the customer growth strategy increases FY17 EBIT.
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