Directors at furniture retailer ScS say they are pleased with the firm's resilient full-year performance, despite seeing a significant fall in profit.
In new results posted just a day after it was revealed Italian group Poltronesofà SpA has made an offer to take the firm private, ScS told investors gross sales fell from £344.7m in 2022 to £343.5m in the year to the end of July. Against what it said was a challenging market in which consumers faced continued economic pressure, the Sunderland-based soft furnishings specialist said underlying pre-tax profits fell from £13.8m to £7.2m.
Those numbers include the performance of modular sofa brand Snug, which ScS rescued from administration in January this year. ScS said Snug, the first acquisition in its history, is an "exciting young business with great potential" as it reported underlying pre-tax losses of £1.9m for the business.
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Across ScS' existing business, there had been strong like-for-like order growth of 5.9% in the second half of the year, with full year numbers in line with the previous year. But since the year end, the firm said trading has toughened with like-for-like orders growing 2.7% in August, 0.3% in September and declining 4.4% in October. Nevertheless, outgoing chair Alan Smith said the firm was cautiously optimistic about the year ahead.
This week shareholders learned of cash offer from sofa and bed retailer Poltronesofà SpA, which has showrooms across Europe. The offer entitles investors to 280p per share, valuing the company at about £99.38m.
Steve Carson, chief executive officer at ScS, said: "We are pleased to announce a resilient set of results and to continue to take market share in what is a challenging environment. We were also delighted to see continued progress in year two of our strategy, including modernising our product offering, investing in our store estate, refreshing and relaunching our brand and advertising and to announce the acquisition of Snug.
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"We remain cognisant of the challenging economic environment facing our customers which is expected to continue throughout FY24. We therefore believe that continuing to focus on our value driven proposition is extremely important so that everyone is able to create the home they love.
"The board is confident that the group's strategy and strong balance sheet will enable ongoing trading resilience and we continue to expect to grow market share while investing in stores, in our digital proposition, and other strategic growth opportunities."
During its 2023 financial year ScS completed a £7m share buyback and opened two new stores in Swindon and York.