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Final Results - 2016

Express Gifts saw product sales for the year as a whole grow by 2.3% to £224.9m.


TV Campaign Launched

Our TV Campaign is now in full swing and will be running on popular TV channels through-out the UK until September.


New eCommerce Platform launched

We have recently changed the platform that runs our online stores for our Studio, Ace and Webb Ivory brands.


Final Results - 2016


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 expansion of our clothing ranges led us to make significant changes to the way in which we promoted our Autumn catalogues. At the same time, and as reported at the half year, we carried out four times as many tests than in prior years to investigate the possibility of using this expanded clothing range to recruit new customers all year round. Whilst all of this activity impacted our autumn sales, it did give us valuable insights into effective new customer recruitment initiatives. As a result, we are now increasing the number of discounted promotions and our range of outstanding value products and taking advantage of broader advertising media, including television, to promote these and our value message. We are already seeing a positive response to our revised recruitment campaign. Our aim is to recruit 100,000 additional customers this year. Although we are only in the early stages of our campaign, we have already made good progress with the recruitment of 36,000 additional customers, in line with our plan.
  • As part of our programme to monitor affordability in granting credit we had introduced constraints which were not believed to be optimised to provide the best outcome for our customers. These constraints had an adverse impact on product sales. We have addressed this through extensive trials that have enabled us to ensure a more appropriate level of affordability assessment in recent months, whilst ensuring fair customer outcomes, and this is already showing a positive effect on sales growth.
  • In recent years our call centres have struggled to cope with demand during the peak sales period of the year and this has undoubtedly resulted in lost sales. To address this, we have invested in our own call centre operation in the Philippines which has recently been commissioned and will be fully operational for the coming peak season. This will give us much greater flexibility to cope with peak demand and improve our resilience in a more cost effective manner.
    These actions have contributed to product sales in the new financial year to date that are strongly ahead of last year.

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.

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