Tuesday 12 April 2016 12:02 pm

Furniture chain ScS narrows losses as sales heat up

Furniture chain ScS said losses narrowed in the first half of the year as demand for its sofas and flooring reached a record high.

The figures

The retailer, which floated last year, said its like-for-like order intake – which reflects sales it has not yet booked – rose by 9.1 per cent in the six months to 23 January, marking the highest level ever achieved in the period.

Gross sales were up 10.2 per cent to £145.4m, while its gross profit increased by 13 per cent from £57.3m to £64.8m.

As a result, ScS's operating loss narrowed to £3.4m from £5.3m before exceptional items in the first half of last year.

What this means is that although the crucial May Bank Holiday day trading period is still to come, ScS still expects full-year profits to be modestly ahead of market expectations, as it flagged in January.

Why it's interesting

ScS had a bumpy start to life as a public company last year, blaming the warmer weather and uncertainty over the General Election for a sharp slide in sales in April, as well as having to shoulder hefty costs relating to the launch of its House of Fraser concessions.

However, things have since perked up and in January the retailer hiked its full-year expectations on the back of strong trading across its 97 stores.

House of Fraser concession gross sales have rise by 18.1 per cent over the period and further work to its website has helped boost online gross sales by 17.3 per cent to £4.3m.

The board has also declared an interim dividend of 4.67p per share. However shares dipped slightly, suggested much of the value was already factored in when the initial hike in profit guidance was announced in January.

What ScS said

"These results demonstrate the progress that has been made in developing ScS into a strong national brand with three very clear retail offers – upholstered furniture, flooring and our House of Fraser concessions, all supported by an improving online platform," chief executive, David Knight, said.

"Looking to the future, we are excited about our growth prospects, including the continued growth from our concession agreement with House of Fraser, our flooring offering and online proposition. We continue to identify new store opportunities for further growth within our target areas. The group's cash flow dynamics and committed bank facilities underpin the strong financial position which will support our ambitions for future growth and deliver value for our shareholders," he said.