Kleeneze drops forecasts as Farepak suffers
Home shopping specialist building on revamp
Home shopping group Kleeneze says its full-year operating profit will be ‘substantially’ below market expectations due to problems at its Farepak hamper business and the start-up costs of its move into TV shopping.
In a trading update ahead of its preliminary results for the year to the end of April, Kleeneze said a long term decline in the hamper market, with customers moving to lower margin vouchers, continues to hit the Farepak business.
The group is to end hamper production at Farepak and source hampers from a third party from Christmas 2005. The one-off costs of closure this financial year will hit full year profits.
The company has re-shaped Kleeneze across the past year to become a home shopping specialist, distributing through catalogue home shopping, internet retailing and television shopping.
Kleeneze has recently acquired internet retailers I Want one of Those.com and Kitbag.com, as well as launching TV shopping channel eeZee tv.
The company said Kleeneze Europe and the internet businesses are performing in line with market expectations. However, accelerated investment in eeZee tv “to ensure an operationally efficient launch” will increase the loss for the year on the TV operation.
Kleeneze said: “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 with expectations for the year just ended and into the current financial year.”
