Profits warning from MFI
Supply chain issue hits order deliveries
Furniture group MFI has warned that slow trading and supply chain problems will lead to a loss in its UK retail business in the current financial year.
In a trading statement, the company said ‘issues’ with its newly implemented supply chain system have led to an unexpected shortfall in its ability to deliver orders.
MFI said that its margins are being “negatively affected through the costs of remedial work with customers and the costs being incurred to address the ongoing systems issues”.
With the company’s August bank holiday promotion ending this week, “orders, whilst in line with last year, were slightly below expectations. Margins were also adversely impacted by the sales mix within the kitchen category”.
The statement said: “Taking these factors into account and the competitive pressures on pricing, the board now believes that UK Retail will show a substantial loss for the current financial year.”
While the Howdens trade supply business continues to perform strongly, “the board now believes that group profit for the second half of the current financial year will be materially below that reported for the first half.”
Across the year so far, UK retail orders are down by 6 per cent, compared to an 8 per cent rise in MFI’s French retail business and a 24 per cent rise at Howdens.
MFI said it has identified the main systems issues and is working to resolve them. “Our focus is to improve radically the service to our retail customers. The new system was put in place to make a step change in the level of customer service and we remain determined to achieve these benefits.”
