ScS delivers ‘resilient’ performance as sales and profit slip

Upholstered furniture and floorings retailer ScS has reported ‘resilient results’ as overall group sales suffered a decline.

According to its audited preliminary results for the 52 weeks ended 29 July 2023, total sales decreased 0.4% to £343.5m from £344.7m in 2022.

This included the results of Snug, which ScS acquired in January 2023, and represented £4.2m of turnover. Snug also reported a pre-tax loss of £2.8m.

Excluding the impact of Snug, total ScS sales reached £339.3m, down 1.2% from the prior year, while pre-tax profit resulted at £8.8m, down from £16.4m. ScS said that this £5.4m reduction was due to a larger order book unwind in FY22.

ScS said gross margin was 44.4%, 1% lower than prior year with increased year on year costs for providing credit to customers partially offset by price increases.

Furthermore, the retailer saw strong like-for-like order growth in H2 of 5.9%, while order intake for the full year was in line with FY22.

During the period, ScS opened two new stores in York and Swindon, while also launching one new standalone Snug store in Bristol and nine Snug concessions in ScS stores.

On its product offering, ScS said: “To improve our product offering, we have elevated and modernised the ranges on offer in our stores, thus attracting a wider customer demographic as we broaden our appeal. This comes on the back of collaborations, including Ideal Home, with whom we have launched eight exclusive Ideal Home branded sofa ranges, and our new collection with Paloma Faith.

“We have also expanded our hard floor proposition across laminate, luxury vinyl tiling and engineered wood. As well as improving the range we offer, in recognition of our product quality, we achieved Kitemark certification for domestic furniture by the British Standards Institute. We are one of only a handful of furniture retailers in the UK to hold this stamp of approval.”

As for current trading, ScS said it has ‘toughened’ over the first quarter, with like-for-like order intake growing 2.7% in August, 0.3% in September and declining 4.4% in October. Order intake was in line with the prior year for the 12 weeks to 21 October 2023.

The group has also opened a new standalone Snug store in Westfield London and seven further concessions in ScS stores, while plans to investment in a further 12 ScS stores to adopt its new format design.

ScS added that it has a ‘resilient’ balance sheet, with forecasted cash of £57m as at 31 October 2023. The group has also announced it has agreed a £99.4m bid approach from Italian furniture retailer Poltronesofà SpA. The offer values each ScS share at 280p, consisting of 270p per share cash and a 10p final dividend. Read more.

Steve Carson, Chief Executive Officer of ScS, commented: “We are pleased to announce a resilient set of results and to continue to take market share in what is a challenging environment. We were also delighted to see continued progress in year two of our strategy, including modernising our product offering, investing in our store estate, refreshing and relaunching our brand and advertising and to announce the acquisition of Snug.

“We remain cognisant of the challenging economic environment facing our customers which is expected to continue throughout FY24. We therefore believe that continuing to focus on our value driven proposition is extremely important so that everyone is able to create the home they love.

“The Board is confident that the Group’s strategy and strong balance sheet will enable ongoing trading resilience and we continue to expect to grow market share while investing in stores, in our digital proposition, and other strategic growth opportunities.”

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