Investors are becoming increasingly comfortable with self-styled 'Sofa Carpet Specialist' ScS (SCS), marked up 3.3% to 200.1p on interims showing growth across all areas of the business. Buoyed by strong trading over Easter, CEO David Knight (pictured below) now expects full-year profits to be 'modestly ahead' of forecasts upgraded as recently as January.
The leather sofas-to-carpets purveyor blotted its copybook with a profit warning (7 May ‘15) only months after its stock market return last year (28 Jan '15). Yet the Sunderland-headquartered furniture retailer's recent newsflow has been strong, today's news triggering a second round of forecast upgrades within four months.
Knight reports record first half like-for-like orders, 13% growth in gross profit to £64.8 million and a narrowed loss before tax. He says the numbers reflect the progress made in developing ScS into a strong national brand with three clear retail offers - upholstered furniture, flooring and its fast-growing furniture concessions in House of Fraser, all supported by an improving online platform.
'Current trading, supported by enhanced marketing spend, remains strong with like-for-like sales orders up 12.0% for the first 37 weeks of FY16, including the key Easter sales period,' says Knight. 'This gives us good visibility for the second half and although the key May Bank Holiday day trading period is still to come, the board currently expects results for this financial year to be modestly ahead of market expectations following the trading update on 16 January 2016.'
Returned to the market as an income as well as a growth stock, cash-generative ScS also reports a strong balance sheet flush with cash of £32.2 million (2015: £26.6 million) and hikes the half-time payout from 2.8p to 4.67p. For more on ScS' chequered history and the rationale behind its stock market return, read our recent article 'It is (never) different this time' here.
