Furniture business restructures with CVA as profit returns

Luxury furniture manufacturer and retailer The Sofa & Chair Company has reported a slight sales decrease but a return to profit.

According to its latest filed accounts for the year ended 30 September 2021, total sales fell 5.2% to £11m from £11.6m in 2020. Pre-tax profit resulted at £251,000, improving from a loss of £734,000 recorded the previous year.

UK sales were down 4.8% to £9.9m from £10.4m, while EU revenues rose 215% to £795,000 from £252,000. Rest of the world sales fell 58% to £371,000 from £887,000.

Stated within its report, the company said that results for the year were below expectations due to the impact of Covid and a “sluggish return to normal patterns of trade”.

“During the year, it was strategically decided to retail a significant amount of product direct to the consumer through sister company Luxury Furniture Sales Ltd as the new outlet business benefitted from increased demand from online customers forced to stay at home during the pandemic,” the company said.

The return to profit was due to delivering significant reductions in business operating costs whilst at the same time improving gross profit by driving production efficiency and improving product margins.

During 2022, the business experienced “stagnant growth” and with a difficult trading outlook, it sought to restructure to allow for future success. In September 2022, the business launched a Company Voluntary Agreement (CVA) process as the “only route forward to sustain its trading platform”. This was approved by 75% of creditors and is now successfully managing its restated liabilities through the scheme.

“As a result of the successful CVA and the benefits to be derived from increased efficiencies, the company is confident it can trade profitably for the foreseeable future, which will underpin its ability to meet its obligations going forward,” the company added.

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