ScS ups forecasts as orders surge post lockdown

(Sharecast News) - Shares in ScS Group rallied on Wednesday, after the furniture and flooring retailer upped its full-years forecasts and reinstated the dividend.
The retailer said that since its stores had reopened, trading had been "very encouraging". The year-to-date increase in order intake was 95.3%, or 165.0% on a year-on-two-year basis. As at 12 June, the order book was £116.6m including VAT, £39.0m larger than the same point a year previously.

The like-for-like order intake was ahead 10.6% in the 46 weeks to 12 June, despite its retail estate being closed by lockdown restrictions for large swathes of the year.

As a consequence, ScS's 2021 performance is now expected to beat market expectations, while the outlook for 2022 is "substantially better" than current forecasts, the retailer said.

Shares in ScS were ahead 12% at 326.0p as at 1045 BST, a record high.

The retailer, which has repaid its £3.0m furlough grants, also announced it would reinstate the dividend. "The strength of the group's balance sheet, coupled with robust trading experienced sine our stores opened in April, has provided the board with the confidence to recommence divisions, starting with an interim dividend of 3.0p per share," it noted.

"The board is encouraged by the group's strong trading performance since reopening. While some uncertainty persists relating to the end of Covid restrictions, the board believes the group is well-positioned to maximise opportunities for growth."

A final trading update for the current year is expected on 5 August, ahead of final results being published in October.

Russ Mould, investment director at AJ Bell, said: "We didn't necessarily all become couch potatoes during lockdown, but we certainly learned the value of a good sofa as most of our evenings were spent sat in front of the TV.

"Given that ScS sells flooring too, it is likely benefiting from the wider push to refresh interiors.

"The scale of the improvement may still have caught some off-guard though, and that is reflected in the shares pushing to fresh all-time highs as analysts hastily upgrade forecasts.

"ScS needs to be prepared for fluctuations in demand as pent-up demand eases, and with the economic outlook and recovery from Covid still fairly uncertain. The company at least has the buffer of a strong balance sheet to fall back on."