RNS Number:6996L
Kleeneze PLC
29 April 2005
For Immediate Release 29th April 2005
KLEENEZE plc
Pre-Close Trading Update
Kleeneze plc ("Kleeneze" or the "Group"), the leading European home retail group
issues the following trading update ahead of the Group's preliminary results for
the period ended 28th April 2005.
During 2004 we have significantly re-shaped Kleeneze to become a home shopping
specialist, distributing through three major channels; Catalogue Home Shopping,
Internet Retailing and Television Shopping, using our core skills of consumer
marketing, product sourcing and fulfilment with next day delivery. To drive
this we have:
* extended our Catalogue Home Shopping channel by launching Kleeneze
Europe in the Netherlands;
* established our Internet Retailing channel through the acquisitions
of I Want one of Those.com, the UK's leading gifts and gadgets website, and
Kitbag.com, the UK's leading internet sports retailer with long term contracts
with a number of major football clubs, including Manchester United, Chelsea and
Barcelona, for the provision of their online and mail order sales in the UK and
certain other territories; and
* launched our Television Shopping channel eeZee tv, broadcasting live
on Sky channel 659.
Catalogue Home Shopping
Kleeneze Europe is trading in line with market expectations for both turnover
and operating profit, with a continued year on year improvement in margin.
The downward trend in distributor numbers in the UK and Eire over the last 18
months has been reversed in the second half of the year such that the number of
active distributors at the end of April was 13,524 (2004: 13,397).
As well as this improvement in distributor numbers, average sales per retailing
distributor continued to increase year on year.
Trading in the Netherlands is encouraging and in line with expectations with
over 2,000 distributors at the end of April. The long term decline in the hamper
market and the accelerating move to lower margin voucher business continues to
adversely affect Farepak.
Therefore, although turnover is above market expectations, operating profit will
be substantially below market expectations. As a result we have decided to
close hamper production at Farepak and source our hampers from a third party
from Christmas 2005 resulting in one-off costs of closure this financial year.
This will result in conversion of fixed costs to variable costs, significantly
de-risking the business going forward.
Internet Retailing
I Want one of Those.com and Kitbag.com are performing in line with market
expectations. We are commencing the integration process through combining
service centre operations of both companies with Kleeneze's existing operational
facilities. We expect to see the benefits of this in the coming year.
Television Shopping
eeZee tv was successfully launched in March 2005. In order to ensure an
operationally efficient launch we accelerated our investment in the business
and, as a result, the loss for the year will be higher than market expectations.
Prospects
We have made significant progress in re-shaping the Group to form a leading
multi-channel European home retailer. In the coming year we plan to continue
that strategy through organic growth across all three channels and we see
further opportunity for acquisitions to develop our strategy, particularly in
Internet retailing.
The Board remains confident of future prospects, especially as our largest
business, Kleeneze Europe, is expected to perform in line of expectations for
the year just ended and into the current financial year. However, we expect
results overall for the year to 28 April 2005 to be below the Board's
expectations resulting from a reduced contribution at Farepak, where as noted
above we have now taken action to stem the decline, and additional start up
costs at eeZee.tv where we are positive on the outlook going forwards.
Kleeneze plans to announce its preliminary results for the year ended 28th
April, 2005 on 6th July, 2005.
For further information please contact:
Kleeneze plc 01793 606000
William Rollason, Chief Executive
Buchanan Communications 020 7466 5000
Richard Oldworth/Suzanne Brocks
This information is provided by RNS
The company news service from the London Stock Exchange
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