Express Gifts saw product sales for the year as a whole grow by 2.3% to £224.9m.
Our TV Campaign is now in full swing and will be running on popular TV channels through-out the UK until September.
Express Gifts saw product sales for the year as a whole grow by 2.3% to £224.9m (FY15: £219.8m). Sales growth in the peak period from August to December was low by comparison with recent years at c.2%. In addition to a cautious approach to stock management, particularly for our newer ranges, which led to a lack of availability in the run up to Christmas, this was attributable to three main factors:
The impact of a fall in Sterling on the price of imports of product from the Far East was around £2m and a significant contributor to the reduction in the operating profit* for Express Gifts in the year.
The financial services activities performed strongly throughout the year, with improvements in the credit quality of the receivables book driving lower bad debt charges, lower default fees, higher interest income and a greater level of customer retention. Total revenue from financial services increased by 7.6% during the year to £88.1m. We continue to monitor the balance between maintaining tight underwriting standards and growing product sales closely to ensure the right outcome for customers. The business initiated a programme of risk-based pricing for its credit offer in November 2015, focussed initially on those established customers who present a higher than average level of risk. This programme will be rolled out to new customers in the coming months which should generate additional sustainable financial services revenue in FY17.
There continues to be a wide-ranging programme of development and investment within Express Gifts, aimed at improving the customers' experience and meeting their evolving expectations. This has included the recent launch of an updated website, which has improved the customer experience through enhanced navigation and search facilities, a fully responsive mobile platform as well as cross-sell and up-sell opportunities. The benefits of the updated website are already starting to be seen. Further upgrades to our core IT systems will follow in the next year to provide the flexibility for future technology improvements to be deployed more quickly and the move to a more digital future.
Our new financial services platform will also be available in summer 2017 to provide the basis for more tailored financial products for our customers. All of this investment is expected to increase order frequency and produce greater levels of customer retention in the coming years.
The management team in Express Gifts has been further strengthened during the year with the appointment of a Deputy Managing Director, who will focus initially on marketing, and a new IT Director with a digital focus. The ongoing process of management development has now seen significant strengthening of our capability in financial services, buying, marketing and IT.
Our application to the FCA for full authorisation of our consumer credit business was submitted in October 2015.