Upholstered furniture and floorings seller ScS (SCS) continues to rebuild confidence in its investment case, its latest market missive driving another round of upwards earnings revisions.

Albeit delivered against weak prior year comparatives, trading through the two May Bank Holidays exceeded expectations and CEO David Knight says annual profits will beat forecasts which have already been significantly upgraded this year.

Shares in Sunderland-headquartered ScS, the self-styled 'Sofa Carpet Specialist', skip 8.3% higher to 202p as a trading update confirms continuing strong momentum behind the business, whose customers have not seemingly been put off by Brexit concerns, yet.

ScS corner sofa room

This time last year (7 May '15), ScS coughed up a profit warning a matter of months after its stock market return (28 Jan 2015), blaming a general election-related slowdown during the Easter and May Bank Holiday periods, though this alert is fading from investors' collective memory, as the share price chart illustrates.

Web chart - SCS - June 16

The home improvement retailer has generated 14.6% growth in like-for-like sales order intake over the 45 weeks to 4 June, implying an acceleration in same-store sales growth over the past 8 weeks, ScS developing into a strong national brand with an improved online platform and enjoying success with concessions in House of Fraser.

Knight says ScS 'continues to show excellent progress on a like for like basis in all retail categories' and should beat profit estimates upgraded following a positive January trading update, then after strong interims in April.

Investec Securities today upgrades its years to July 2016 and 2017 pre-tax profit estimates by 8.8% and 5.1% respectively to £10.8 million and £11.4 million and its price target rises from 218p to 235p accordingly.

However, it should be noted that the broker's more measured percentage upgrade for the next financial year in part reflects the risk uncertainty around the EU referendum (23 Jun) could crimp 'big ticket' spend and cause a sluggish start to FY17.

For those interested in the history of ScS and the backcloth to its return to the market as a compelling dividend yield play, read our article 'It is (never) different this time' here.

Issue Date: 09 Jun 2016