ScS back in the comfort zone with new openings

Sep 27 2008 by Karen Dent, The Journal

FURNITURE giant ScS is pushing ahead with new store openings less than three months after being rescued from administration by private equity firm Sun European Partners.

The chain opened a new store in Nottingham last Thursday and is unveiling another in Cardiff next Thursday, the same day its adverts return to national TV screens. It brings the number of ScS shops to 97, including 10 in the North East, where its distribution centre and Sunderland headquarters are also based.

Chief executive David Knight said: “We have agreed an ambitious and forward-thinking plan with continued private equity backing, giving us a financially strong position that will allow us to push forward with business plans and reaffirm our solid foundations.

“We are actively looking at other opportunities but we are not committed to a number. We are pretty close to having another deal agreed.”

Despite the effects of the credit crunch, ScS has been buoyed up by better-than-expected sales during the late summer.

“Certainly trading in August and September was ahead of our expectations we had set ourselves,” said Mr Knight.

The business, which employs 1,300 staff including more than 200 in the region, has introduced interest-free credit and low monthly payments for customers and is refocusing its approach to the market.

“We are looking to give the customer better value, it’s not looking at real budget – it’s a £499 entry level rather than £399. We are aiming at the mid-market,” said Mr Knight. He is also confident that people tightening their purse strings and the associated trend of entertaining at home will benefit ScS, despite the downward spiral in the housing market.

“We are reading in the Press that September is the first month that more beer will be sold in supermarkets than in pubs. Ready meal sales are increasing. People are watching their pennies but are very much entertaining at home,” said Mr Knight. “We hope that is going to put the focus back on the home.

“We saw this in the very early 1990s, when people invested more in their current home. Sure, we are all trading in a difficult environment but the business is in a very stable position.”

ScS was bailed out by Sun European for an undisclosed fee after an insurer refused to cover five suppliers against the furniture chain being unable to pay them. It suspended its shares on the stock exchange, entered negotiations with the private equity firm and put itself into administration.

Sun bought ScS from administration and has pumped cash into the business to prevent a repeat of the issues that almost led to its collapse. The deal saved jobs but wiped out shareholders’ hopes of a dividend.