ScS makes good progress despite losses in H1

In its interim results report for the 26 weeks ended 28th January 2023, ScS says it performed in line with expectations during the half, with the acquisition of boxed sofa brand Snug bringing further diversification and market share potential to the group.

Delivered sales increased +3.4%, with improvements in the supply chain reducing lead times, yet ScS suffered an underlying loss before tax of £4.7m – which was, it says, nonetheless £0.9m ahead of the prior period and typical of H1 performance.

Gross profit was £67.8m (up +0.3% YoY), not counting any contributions from Snug – the set-up and acquisition of which were largely accountable for the £0.8m costs incurred during the half. Excluding stock sales, gross margin was in line with the prior period. ScS ended the half with cash of £76.9m (was £87.9m for H1 FY22). It also completed its share buyback programme, returning £7m to shareholders.

ScS’ expectation for underlying profit before tax for the year is £7.7m, which excludes the impact of the acquisition of Snug, which it believes will be earnings accretive in FY24: “We intend to invest in the business throughout H2 and expect Snug will report a second half loss before tax of £1m.”

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