The sofas specialist warned that a “severe” fall in consumer confidence had led to a sharp downturn in orders that “will have a significant adverse impact on sales and, therefore, the result for the six months to January 26”.
Executive chairman Mike Browne said: “Since we last updated the market in September, trading conditions have been much more challenging than anticipated.”
The total sales order intake was down 9 per cent for the first 17 weeks of the financial year. Like-for-like sales orders worsened from a decline of 8 per cent in the first seven weeks to 17 per cent for the period.
Kaupthing analyst Matthew McEachran said the figures implied a 20 per cent like-for-like decrease for the most recent nine weeks reported on.
He warned: “The drop off in order book is severe, but they still suggest making the initial guidance is feasible, depending on the winter Sale. It seems highly unlikely and does not appear to be a feasible suggestion.”
The retailer said there were still several significant trading periods ahead, including Boxing Day, the January Sale, Easter and May bank holidays, when ground might be made up.
ScS also expected to minimise the impact of the tough conditions by reviewing fixed and variable costs “to reduce the cost base to a level more appropriate to current trading”.
The store group will also revert to a more aggressive ad campaign for the crucial Boxing Day and January Sale periods.
Numis analyst Ramona Tipnis suggested the retailer was “clutching at straws” and noted: “Our view is that credit conditions remain difficult with little to suggest that consumer confidence and credit availability will improve in months to come.”
Numis cut its profit forecast to£4 million. Previous market expectations were close to£10 million.
No comments yet