Shares in ScS (SCS) cheapened 9.6% to 225p on Friday after the value sofas-to-carpets seller reported a reduction in store footfall and conversion over the past seven weeks with consumers spending less on big ticket items.
The Sunderland-based retailer, which had previously reported a strong start to the year, attributed the recent step-back in trading momentum to a change in behaviour, with consumers ‘shopping earlier for Christmas when compared with previous years’ against a backdrop of industry and media warnings around supply chains and product availability.
SUPPLY CHAIN PAIN
Consumers are clearly tightening their purse strings with respect to big ticket discretionary purchases, while supply chain delays are also hurting ScS.
The retailer warned extended product lead times across the furniture and wider retail industry are ‘having an impact on current purchasing trends’ ahead of Christmas.
SCS reported a 10.6% like-for-like order decline year-on-year for the 16 weeks ended 20 November 2021, although this followed an ‘unprecedented period of pent-up demand at the beginning of the prior year’.
However, two year like-for-like orders were up by 0.9% and ScS’ online business, ‘which is a key part of our ongoing strategy for growth’, continues to perform well with 38.5% two-year like-for-like order growth for the first 16 weeks of the year.
Led by CEO Steve Carson, ScS is gearing up for the important winter sales period, which despite prevailing uncertainties, management is said to be approaching ‘in a manner consistent with that which has proven successful in previous years’.
The retailer stressed that it continues to work closely with suppliers to mitigate against ongoing supply chain challenges, with new partnerships and new UK suppliers set to offer a furniture range on shorter lead times.
THE SHORE CAPITAL VIEW
‘After a stellar period of trading through the various stages of Covid 19 restrictions, and easings, ScS has reported a step-back in trading momentum in recent weeks’, said Shore Capital.
‘We await to see if the slower trading is temporary, reflective of a change in Christmas shopping patterns, or of a more permanent basis’, added the broker, which left its year to July 2022 pre-tax profit and earnings per share forecasts unchanged at £13.7 million and 26.5p respectively.
