ScS says it is encouraged by a return to order growth in recent months, after a sharp fall in orders during the autumn. During the first half of the year it expanded both its online and store operations and says it is now well-placed for the future.
The multichannel sofas and carpets retailer today reports like-for-like orders falling by 4.7% in a trading update for the 26 weeks to January 28 2023, compared to the same time a year earlier. But while sales fell by 9.1% over the first 16 weeks of the period, they returned to growth in the final 10 weeks, covering the Christmas period and opening of the post-Christmas sales period, when they rose by 2.6%. The figure is reported on a like-for-like basis that strips out the effect of store openings and closures.
ScS now trades from 100 stores after opening new shops in Swindon and York during the half-year. It has also expanded through acquisition, buying modular sofa in a box business Snug out of administration on January 10. The retailer says the acquisition of Snug, with its “strong brand and differentiated digital-first offering” represents progress in its strategy – helping it to reach more customers and grow its market share.
In today’s trading statement, ScS says it is encouraged by the recent growth in orders, and that its “refreshed strategy, strong cost management and robust balance sheet places it in an excellent financial and operational position”. It also says it is on track to meet full-market expectations. By January 28 2023 it had cash of £76.9m and no debt.
Commenting, Nicholas Found, senior consultant at Retail Economics, says: “Home-related spend is at risk from consumers needing to cut back spending and ScS was unable to escape some of these pressures. Discretionary budgets are being eroded by inflation across the least and middle affluence households – key demographics for ScS – and its performance came under pressure during its first half.
“Despite the challenging backdrop, there is opportunity for ScS to capture market share if it can tap into a price conscious consumer and broaden its reach through its acquisition of Snug in January. ScS’s multichannel and value proposition chimes with shoppers adopting recessionary behaviours, including trading down and searching across stores and online for the best deals. And over the final 10 weeks of its first half, ScS managed to edge up its like-for-like sales by 2.6% as it honed in on its key winter sale.”
ScS is ranked Top250 in RXUK Top500 research.