ScS could see sales of around £314m say analysts
ScS (LON:SCS), the sofa seller, has hailed its trading levels since its shops reopened following the easing of restrictions.
As a result, ScS will resume its dividend payments to shareholders, starting with an interim payout of 3p per share.
An update released by the firm on Wednesday said its full year results would surpass expectations. Analysts have suggested it could see sales of around £314m, while profits before tax could come in at £11.8m.
Due to the ability to save more, a number of people have used the prolonged lockdowns as an opportunity to improve their homes.
As at June 12, ScS’s order book, at £116.6m, far exceeded the £39m recorded at the same point one year ago.
Russ Mould, investment director at AJ Bell, was not surprised by ScS’s improved sales figures during the pandemic.
“We didn’t necessarily all become couch potatoes during lockdown but we certainly learned the value of a good sofa as most of our evenings were spent sat in front of the TV,” Mould said.
“While it is possible to buy your new suite online, many of us would feel more comfortable going out and sampling its comfort factor for ourselves. This created pent-up demand which has now been unleashed in full force.”
“It’s unsurprising that ScS has seen a big improvement in trading as physical shops were able to reopen, particularly given there is a cohort of consumers who have saved up cash during the pandemic through reduced outgoings on things like commuting and socialising.”
As lockdowns ease and the economic outlook looks uncertain, ScS could see fluctuations in demand.
“The scale of the improvement may still have caught some off guard though and that is reflected in the shares pushing to fresh all-time highs as analysts hastily upgrade forecasts. ScS also deserves credit for its ability to meet this surge in demand, particularly at a time when there is a shortage of some raw materials,” Mould said.
“ScS needs to be prepared for fluctuations in demand as pent-up demand eases and with the economic outlook and recovery from Covid still fairly uncertain. The company at least has the buffer of a strong balance sheet to fall back on.”
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