Shares in ScS continue slide
Jan 11 2008 by Andrew Mernin, The Journal
SHARES in sofa retailer ScS Upholstery plunged by 20% yesterday – the latest blow for the firm which has seen its stock value fall by around 90% in the last 12 months.
The Sunderland-based group finished the day down 12.25p at 44.5p as analysts blamed last week’s profits warning by national rivals Land of Leather as the main reason for its poor recent market performance.
Meanwhile the firm, which suffered last year as consumer confidence was hit by turmoil in the financial markets, received little respite yesterday as the Bank of England ignored calls for a second interest rates cut.
In what was described as one of its toughest decisions for years, the Bank’s Monetary Policy Committee (MPC) kept borrowing costs on hold at 5.5%.
Gary Fawcett, assistant director and investment manager at Wise Speke, said shares in ScS had plunged as larger national retailers had struggled to re-ignite confidence among consumers. He also said the fortunes of shares in ScS and retailers in general were unlikely to pick up in the near future as bellwether stocks like Marks & Spencer continued to struggle. He said: “One of the main reasons for the plunge is because of the Land of Leather profits warning earlier this month. The company warned that full-year profits would be below last year’s outcome and, given that ScS is in the same line of business, the market has taken it on.
“Looking forward I think the uncertainty will continue and I can’t see what the catalyst to pick things up will be.” Retail analyst Nick Bubb, of Pali International, also painted a bleak future for ScS and its furniture retail counterparts. He said: “The furniture market is widely thought to be the toughest of all the retail markets. They are big ticket items which people aren’t buying at the moment – people can make do with an old carpet or sofa.”
Shares in Marks and Spencer fell again yesterday, by almost 20%, ending the day 14.25p worse off at 395p – the lowest level for more than two years.
