Upmarket furniture retailer Smallbone has suspended its shares as it launches a strategic review of the business amid torrid trading conditions.
The retailer said February was a “challenging” month and sales were down. It also said there has been a “significant” reduction in customer deposits.
In a statement Smallbone said: “This has caused the board to instigate a further review of its working capital needs for the foreseeable future. The initial conclusion of the review is that the financial package announced on the February 6 will not be sufficient in these changing circumstances.
“The board believes that the difficulty in forecasting its future working capital commitments may mean that the group needs to be part of a larger group, with greater balance sheet strength. Therefore the board has begun a strategic review of all options to maximise stakeholder value, including potentially a sale of the group or its trading subsidiaries to a third party, and will update shareholders as soon as possible.”
Last month Smallbone secured a£5.9m financing package after revealing it had a challenging fourth quarter in 2008.
At the time is said that, due to the increased cost base of the group and re-structuring costs, EBITDA for 2008 will be about 45 per cent of its EBITDA of£5.1m notched up in 2007.
The retailer ended 2008 with a forward order book down 6 per cent year on year to£39m.