Worst bank holiday ever is the latest blow for SCS

May 15 2008 by Chris Knox, The Journal

SOFA store chain ScS has delivered another gloomy trading statement after suffering one of the worst bank holiday’s trading in its history, and believes the downturn will continue well into the year.

The Sunderland-based retailer, which had hoped to break even this year, said that like-for-like sales were down by 14% during the eight weeks up to and including May 10.

Analysts now believe the firm could be heading for an annual loss after it was disappointed by the traditionally busy May Bank Holiday period, which saw its like-for-like sales down a massive 20% for the period.

ScS also said that footfall at its 95 UK stores was down by almost half during the public holiday compared to last year and that like-for-like sales for the 41 weeks of its current financial year were down by 15%.

The figures continue a worrying trend for the firm, which was forced to close down its loss-making Network Services Division earlier this year as well as scrap plans for new stores.

This latest blow comes amid fears that poor sales will continue among big-ticket retailers as a result of the credit crunch.

ScS chief executive David Knight said: “We had been quietly confident of sales picking up before being hit by one of our worst bank holidays yet. Like a lot of retailers out there at the moment, I just can’t say when things are going to pick back up, but it doesn’t look like being soon.

“People just aren’t going out to browse for big purchases anymore but are making do as a result of tighter budgets. They are also unsure as to what the current tax situation is and where they stand financially, with the Government’s latest u-turn only adding to the confusion.”

Mr Knight added that ScS’s store opening programme was completely on hold until the market improved.

Analysts have previously said that the firm, which made pre-tax profits of more than £7m in 2007, could be set to deliver its lowest annual profit for 10 years after its in-house broker KBC Peel Hunt slashed its forecast for the year to July 2008 from £5.5m to £2m.

However, some believe the figures could prove even worse. Vinay Bedi, divisional director of stockbroker Brewin Dolphin in Newcastle, said: “A loss is definitely possible as it is impossible to say when ScS’s market is going to improve.

“The noises coming from most of the analysts indicate that it won’t be any time soon.”

PAGE TWO: More on SCS's financial performance this year.