ScS profits rise but sofa chain warns retail market to remain challenging

Furniture retailer ScS has reported higher interim profits but cautioned that trading in the medium term is expected to remain tough.

The company also warned that margins in the second half of the financial year will be hit by higher costs of providing interest-free finance to customers for its home furnishing products due to movements in Libor – the interest rate used when banks lend to one another.

As a result, ScS expects second-half margins will be at a similar level to those recorded in the first half of the prior year.

Meanwhile, chief executive David Knight said the retail industry continues to “suffer in the midst of the uncertain economic and political environment” and he therefore expects the “trading environment to continue to remain challenging in the short to medium term, although the board is confident that the group is well positioned to maximise opportunities as they arise”.

ScS made a profit of £545,000 in the six months ended January 26, compared with £414,000 in the same period a year earlier.

Revenue increased 1.1% to £151.4 million, while like-for-like order intake grew 1.5%.

Order intake over a two-year period was up 4.5%.

Mr Knight said: “The group continues to deliver profitable growth whilst increasing its resilience. The board is pleased with the group’s year-to-date trading, which is in line with its expectations.

“Our focus on providing excellent choice, value and quality for our customers, coupled with our commitment to delivering against our strategic priorities, continues to prove successful.”

The firm said current trading is in line with expectations, with like-for-like order intake up 2.9% for the 33 weeks ended March 16.