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.
After a relatively low rate of sales growth in the first nine months of the year, the business has seen a strong recovery in recent weeks, with the Spring/Summer main book launched in January performing particularly well across a range of categories. The stock issues that suppressed sales in December have not recurred, giving us the confidence of being able to increase the rate of new customer recruitment in FY17 to at least maintain the current rate of product sales growth of around 8.5%.
The business has continued to see lower retail margins as a result of both the weakness of Sterling affecting the price of its imported goods and competitive pricing. These currency headwinds in particular are expected to continue into FY17. Until now, the Group's hedging policy has been to only cover exposures occurring within the current financial year. In keeping with sector peers, currency hedging will now be undertaken on a rolling 12-month basis, which will lead to period-end valuation gains/losses on future hedges being reported separately on the Group's Income Statement.
The financial services activities have performed strongly throughout the year, with improvements in the credit quality of the receivables book driving lower bad debt charges, higher service charge income and a greater level of customer retention. 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 financial services revenue in FY17.
Overall, we expect that Express Gifts and our Overseas Sourcing office will report an operating profit* for FY16 approximately £2m lower than the £33.6m reported in FY15, reflecting a currency impact of around £3m as previously reported.