23rd Mar 2015 10:00
LONDON (Alliance News) - ScS Group PLC Monday reported a significantly wider pretax loss for the first half of its financial year due to costs associated with its initial public offering and the establishment of concessions in House of Fraser stores, but revenue increased thanks to strong growth in flooring sales and the sales from its new House of Fraser business.
It also predicted that it will meet market expectations for the full year as sales order intake grew strongly.
In its maiden set of earnings since its January IPO, the sofas and carpets retailer reported a pretax loss of GBP13.1 million in the 26 weeks to January 24, compared with a loss of GBP2.5 million a year earlier, as it booked GBP2.4 million of costs for its IPO and distribution, and operating costs rose by GBP8.5 million combined.
"This principally reflects the impact of the launch of the House of Fraser concession at the end of last year, which we believe will stand us in good stead for the future as House of Fraser customers become increasingly aware of the new products and service offered and we develop this revenue and profit opportunity over time. Advertising and marketing expenditure is also typically larger in the first half due to seasonal holidays, with revenue from orders booked during late December/January recognised in the second half," it said.
Still, revenue rose to GBP132.0 million, from GBP115.0 million, and total sales order intake on a like-for-like basis was up 7.8% thanks to a 13.0% increase in floorings sales.
It also said like-for-like sales order intake was up 7.5% in the first 33 weeks of the financial year as a whole, and current trading remains in line with management expectations.
"Our sales order intake is our best ever at this time of year and this momentum gives us good visibility for the second half. We are, therefore, confident of meeting market expectations for the full year" Chief Executive David Knight said.
The company's gross margin fell to 43.5% in the half, from 44.0% a year earlier, due to promotional activity aimed at growing its floorings business.
It declared a maiden interim dividend of 2.8 pence a share.
"Looking ahead, we are excited about our future growth prospects, including our new concession agreement with House of Fraser, our flooring offering and online proposition," Knight said.
In 2014 ScS began to operate the furniture and carpet concession ranges for the House of Fraser "For Living" brand. ScS currently operates in 30 House of Fraser stores across the UK. It also developed and launched a bespoke House of Fraser 'For Living' website that links through the House of Fraser website.
Revenue from the House of Fraser concession rose to GBP8.8 million, from GBP1.5 million a year earlier.
ScS shares were down 5.2% at 210.00 pence Monday morning, although they remain above the IPO price of 175p.
By Steve McGrath; [email protected]; @stevemcgrath1
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