- Value sofa seller delivers resilient results
- Positive order momentum over past two months
- Snug acquisition bedding in nicely
Shares in ScS (SCS) rallied 4.7% to 188.5p after the sofa, flooring and furniture seller delivered resilient first half results and reiterated full year guidance, avoiding the earnings downgrade disappointment delivered by rival DFS Furniture (DFS) last week.
Despite the cost-of-living crisis causing consumers to shy away from big ticket purchases, ScS’ strong value proposition enabled the retailer to continue winning market share while its current trading update highlighted positive order momentum over the past two months.
ScS insisted the outlook is ‘positive’ and it remains on track to deliver full year profit before tax in line with the £7.7 million called for by consensus, a forecast which excludes the sofa and sofa-bed business Snug it recently bought out of administration.
SCS SEES IMPROVING MOMENTUM
For the half-year to 28 January 2023, ScS’ underlying pre-tax loss narrowed from £5.6 million to £4.7 million.
The deficit reflected the difficult consumer backdrop as well as the usual heavy marketing investment in the first half to support order intake over the key winter sale. Revenue rose 3.7% to £147.9 million as supply chain improvements reduced lead times.
Encouragingly, ScS’ trading picked up significantly through the half and momentum has improved in recent weeks, with the retailer generating like-for-like order growth of 5.7% in the 7 weeks to 18 March 2023.
WHAT DID THE CEO SAY?
Chief executive Steve Carson said his charge made ‘good strategic progress in the first six months of the financial year and continued to take market share. We are pleased with the strength of our winter sale performance and the subsequent increase in order momentum over the last two months.’
Carson added: ‘The macroeconomic environment continues to be challenging and we are mindful of the pressures faced by many of our customers. Therefore, continuing to focus on our value driven proposition is more important than ever so that everyone is able to create the home they love.’
THE SHORE CAPITAL VIEW
ScS is ‘resilient’ and ‘deserves to be re-rated’, insisted house broker Shore Capital.
In what remains a challenging time for the UK consumer, Scs has ‘once again demonstrated clear resilience and agility. With capacity continuing to come out of the UK market, ScS looks increasingly well placed to continue to gain market share over short, medium and long term, aided by a careful modernisation programme under CEO Steve Carson, supporting a return to growth and sustaining cash generation and a balance sheet that provides considerable optionality.’
