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well ive kept my small stake in scs 5k of share i think they will perform well and pay a divi at the end of the year.
The retail sector has been badly hit for obvious reasons due to the Covid-19, however opportunities also present themselves to pick up good value stocks, and for me £SCS is one that falls into that category, hence adding to the ISA along with another couple of retailers including £CARD which I will also share my thoughts on time permitting over the next few days.
I have been looking for retailers which are well run and historically well performing which I believe will see the Covid-19 crisis though and who have a commitment to reinstating the dividend payment as soon as we get to the other side.
ScS moved quickly as the Covid-19 situation progressed and have utilised the Government schemes available to protect the financial situation. Including the £12m inflow from a revolving credit facility, as at 23 March 2020, SCS held £74.8m in cash.
The company noted on the 6th of April on holding back the interim divided:
“Our focus in recent years on building a business with increasing resilience is reflected in the strength of our balance sheet and the level of flexibility in our cost base. We cannot predict the impact of COVID-19 but we believe the Group is as well positioned as it can be.”
“Despite the strength of our balance sheet, the Board feels that it is appropriate to suspend payment of the interim dividend, which was due to be paid on 7 May 2020. At a time when the UK Government is supporting ScS, it seems inappropriate to use the cash for anything other than protecting the financial strength and resilience of the business.”
ScS, or to give it its full title the ‘Sofa and Carpet Specialist’ is one of the UK’s leading furniture and flooring retailers and have over 100 years of furniture and retailing experience. The operate from a 100 stores and via the website and the current share price is currently sat on the 52wk low of 128p and that being 51% down on its year high of 258p. On the current market cap of £48m, this compares favourable with a net cash position of £63m stated at the end of March. The company is trading at less than 5 times net profit (if you believe they will get back to pre Covid-19 performance) this compares favourably to the market leader £DFS who are on 7.8 and with a weaker balance sheet.
ScS with an overall StockRank of 91, hits green on 5 out of 9 on the the Piotroski F-Score which aims to identify the healthiest companies amongst a basket of value stocks through applying a set of nine accounting-based stock selection criteria.
Having just announced on their website this bank holiday weekend that all its stores located in England are now back open under the new safety measures the company can start to rebuild following the shut door period.
With the economy dipping into recession and the likely housing market stagnation certainly this year and fewer people moving house, coupled with restrictions on flights and actually the confidence needed to be in the air in a confined space, I believe more people will invest in their homes later this year and will spend on things like new sofas, furniture, carpets and tables, with the 4 years interest free credit being a huge bonus for some families.
ScS for me is well placed to survive the Covid-19 due to the strong balance sheet, established market position and actually selling a product that I believe will benefit this year from the stagnant housing market and stay at home theme.
Recent investment in the e-commerce offering has driven an online sales increase of 24.5% to £9.8m (2019: £7.8m) at the half year stage, this again has helped the company during the lockdown period where the company has still maintained its website and active twitter feed to drive traffic with 4 years interest free credit, deals of the day and offers of money off if you buy before midnight.
I have previously shopped at ScS purchasing a 2-seater for the conservatory, no complaints at all to be honest and would shop with them again. ScS continues to focus on customer service with an "Excellent" Trustscore on Trustpilot which is based on over 200,000 reviews, one of only four companies in the UK to reach this milestone.
Based on the above, ScS Group Plc is a company I was happy to add to the ISA.
Ticker code: SCS, Shares in issue: 38m, Current SP: 128p, Market Cap: £48m, 52 Wk Low: 128p, 52 Wk High: 258p
Im trying to diversify but so hard not to bag another tranche here tuesday
Totally agree with that and as stated CARD. My third is WRKS for retail winners coming out of lockdown. SCS probably the least risky of the bunch.
Retail Pick - ScS Group Stores Now Back Open
https://app.stockopedia.com/content/retail-pick-sc-s-group-stores-now-back-open-611788?order=createdAt&sort=desc&mode=threaded