29th Sep 2015 08:16
LONDON (Alliance News) - ScS Group PLC Tuesday said it swung to a loss in its recently-ended financial year, despite posting revenue growth, as its gross margin was hit by promotions it made in the autumn season and it booked higher costs related to distribution, administration and its IPO.
The furniture and floorings retailer said that it made a GBP1.7 million pretax loss in the year ended July 25, having made a GBP7.2 million pretax profit the year before, even though revenue rose 13% to GBP276.7 million from GBP244.1 million.
ScS said that gross margin as a percentage of gross sales reduced by 30 basis points to 43.5% from 43.8% as a result of competitive promotions throughout the year, including a 'free carpet' offer during the autumn sale, as it worked to promote its flooring business and increase combined sales of furniture and flooring.
The company also faced higher costs relating to its new distribution centre and administration expenses, the latter of which included a GBP3.7 million cost relating to its IPO earlier in the year.
It added that its performance also was hit by a short, sharp dip in trading momentum in April and early May, which is seasonally a very important period for the business. This was caused by a particularly warm early spring and the timing of the UK general election campaign, ScS said, adding that while trading returned to a normal pattern through the summer, the business was unable to recover from the loss of footfall it had suffered.
However,sales order intake was up 13% on a like-for-like basis in the nine weeks to September 19.
ScS will pay a total dividend of 14.0 pence per share for the full year.
"We are encouraged by our trading performance since the start of the current financial year and we are in line with our expectations. However, we remain mindful that we continue to face strong comparatives during the remainder of the first half of the year and that a number of key trading periods are ahead of us," Chief Executive David Knight said in a statement.
"With a strong brand, broad product range with good consumer appeal, an excellent network of well-invested stores, with an opportunity to expand, from our existing geographic footprint, and growth from the continued development of the House of Fraser concession, the group has a clear growth strategy. We look forward to the year ahead and beyond with confidence," he added.
Shares in ScS were trading up 3.4% at 161.13 pence Tuesday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
SCS.L