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27 Jan 2021 | 08:12

ScS reports first-half sales rise but latest lockdown taking its toll

(Sharecast News) - Sofa retailer ScS reported a jump in first-half sales on Wednesday and said it remains "cautiously optimistic" about the outlook, despite the third national lockdown denting sales. In the 26 weeks to 23 January 2021, gross sales rose 13.9% from the same period a year ago to £182.3m. ScS attributed the increase to "significant" order intake growth in June and July following the first lockdown, along with strong trading in the first quarter of the current financial year

Meanwhile, online sales surged 98% over the half when compared to the same period a year ago.

The company hailed a "positive" start to the year, with order intake growth over the first 21 weeks despite further temporary regional and national store closures across the UK due to the pandemic.

ScS said 37 of its stores closed on 30 December, with the remaining 20 closing on 4 January. While performances in the stores were strong while they were open, like-for-like order intake fell 65.2% between 20 December and 23 January, after rising 12.4% between 26 July and 19 December.

"Whilst it is too early to provide clarity on the outlook for the weeks and months ahead, we remain cautiously optimistic given the strong trading experienced by the group following the first and second lockdowns," ScS said.

"Given the tactile nature of our products, the majority of customers chose to wait until stores re-opened to try our products in person before making their purchasing decision. This resulted in the business benefiting from pent-up demand, coupled with an increased level of investment by UK consumers in their homes."

ScS said it has a robust balance sheet and continues to focus on cost and cash management to ensure it remains resilient "in these challenging times".

Broker Peel Hunt said: "H1 was, as expected, strong up until the third lockdown, after which sales naturally collapsed, but there was enough in the tank for a strong profit performance, enhanced further by the short-term positive of turning the advertising off in January.

"H1's EBITDA may well match FY estimates and more, but with the stores now closed, H2 will look grim by comparison, so FY numbers end up unchanged. We are not changing FY22E either. The shares remain eye-catchingly cheap, and with plenty of cash on the balance sheet, they are worth much more in our view."
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