Furniture giant MFI signalled it was finally beginning to feel the pinch from slower consumer spending today.
Sales in the group’s UK retail arm were up 7.1% in the 45 weeks to 9 November on a like-for-like basis, which excludes income from new stores.
That compares with a 9.7% climb in the first half of the year as MFI said volumes in the furniture market were growing “at a slower rate”.
Total sales across the business, which also includes the French Hygena Cuisines arm, were still up 19.3% in the 45-week period at £1.12bn.
But MFI’s shares dropped 4% in early trading in the City as analysts said the figures showed the spending boom was running out of steam.
Iain McDonald, retail analyst at Numis Securities, said: “The bottom line is that like-for-like sales are slowing down.”
MFI signalled it expected consumer spending to slow when reporting a near 14% rise in interim pretax profits four months ago.
Finance director Martin Clifford-King today said the sales growth over the 45 weeks was still a “good performance”.
He added: “The projections for the economy are fairly benign, the next interest rate move may be down and unemployment is still low.”
MFI has been introducing bathroom and sofa ranges into out-of-town stores in line with a strategy to provide furniture “for every room in the house”.
So far 68 of the group’s 192 out-of-town stores have been refurbished and Clifford-King said the sales uplift was around 25%.
The next intensive refurbishment period will fall between April and August next year and the programme is expected to be completed by the end of 2003.
MFI bought The Sofa Workshop, based in Petworth, West Sussex, last week in a £12.3m deal to support its expansion plans.
The group also wants its trade business Howden Joinery to grow by 50% in the UK over the next three years.
Analysts expect the group to post full-year pretax profits of between £75m and £80m for the full-year, up from £58.8m in 2001.
The group’s shares were down 5.5p at 136.5p.
EGi News 13/11/02
