ScS hit by credit squeeze

The crackdown on consumer credit by anxious banks has affected sales at ScS, the furniture retailer. David Knight, the chief executive, said that customers who were able to get loans 12 months ago are now being denied, knocking sales of expensive items.

Pre-tax profits in the 10 months to the end of July declined to £7.5 million from £16.8 million in the previous year. The chief executive was disappointed by the results and announced that a shortfall in sales against original expectations has had a considerable affect on profits.

In the medium term, however, the company does expect an improvement. The company noted difficulties in their logistics chain which has added to distribution costs but these problems have been addressed.

In early trading yesterday, the shares dropped 15p to 192p. KBC Peel Hunter, the broker, has reduced its profit forecasts by 8%, mentioning concern over the possible impact of the credit squeeze on the economy. It now anticipates profit before tax at £11 million and earning per share of 21.6p.

Story link: ScS hit by credit squeeze