ScS slips into the red as supply chain disruption impacts profits
Furniture and flooring retailer ScS has reported a pre-tax loss of £3.6m in the first half of its 2022 financial year but says it is on track to deliver a full year profit.
The Sunderland based chain said the performance compared with a £17.7m pre-tax profit in the same period of 2021 and a £1.2m pre-tax profit in same period of 2020. It said the loss was attributed to international supply chain issues and investment in advertising to drive orders over the key winter trading period.
Order intake was said to be in line with that achieved in the first half of 2020 but supply issues had prevented products being delivered to customers homes, resulting in a larger order book of £148m.
Chief financial officer Chris Muir said that had the business delivered those orders its revenues would have been up about £60m.
Gross sales for the 26 weeks ended January 29 were £151.5m, compared with £182.3m in the same period of 2021 as ScS reported ongoing supply chain issues – including product material and shipping costs – which it says it had worked hard to manage.
Steve Carson, CEO, said those issues included the availability of shipping containers, and also lead times at UK-based manufacturers of ScS products being longer due to pent-up demand and staff absences owing to Covid. Mr Carson said those issues were beginning to ease.
Carson reported to Business Live that: “Like many retailers, supply chain disruption has impacted the group’s first half results. Whilst this has been frustrating it has enabled the business to accumulate a strong order book and we are focused on delivering it through the second half of the year. We are progressing our strategic goals, whilst maintaining strong cost control and cash management.”
ScS said it was on course to deliver pre-tax profits at market expectations in the second half of 2022 and that shareholder returns would be enhanced, including a 50% rise in interim dividend to 4.5p.
The group – which reported £87.9m cash on its balance sheet – is also planning a £7m share buyback over the next 12 months.
