ScS Group PLC (AIM:SCS), the retailer of upholstered furniture and floorings, reported full-year pre-tax profits of £16.4mln, which although down on last year’s £22.7mln, were a “good effort in a tricky year”, according to broker Peel Hunt.
The company said group sales were £344.7mln, up 8%, while gross margins proved resilient, dropping to 45.3% from 46.1%, which the broker said was above expectations and a surprise.
ScS cautioned that initial trading in the new financial year has been tougher than in the second half of full-year 2022, with order intake for the first 10 weeks down 7.8% on a like-for-like basis year on year.
It said inflationary pressures and reduced consumer confidence continue to impact visitor numbers (both physical and digital) to businesses which sell big ticket discretionary items.
Steve Carson, chief executive officer of ScS, commented: "We are pleased to be announcing results that are ahead of market expectations.”
“Trading since the start of the new financial year has been subdued, with the challenges of high inflation impacting consumers' disposable income. As previously reported, the sector is seeing softening demand as consumers defer spend on big ticket discretionary purchases.”
“Whilst we expect the coming months to be challenging, we are confident in the longer term growth prospects of the business."
Peel Hunt reiterated its 'buy' rating and a 200p price target, adding “the shares are doubtless cheap with so much cash on the balance sheet”.
At 9.36am, shares in ScS were up 0.59% to 122.2p.