Furniture retailer MFI saw its shares surge today as investors expressed relief that a slowdown in sales was not as bad as they had feared.
Same-store sales across the group were 2% higher in the 20 weeks to 14 May compared with the same period last year, compared with a 4% hike earlier in the year.
Analysts said the market had been braced for slower sales, given the tough retail environment. Shares were 6% higher today.
MFI is one of a string of UK retailers to have suffered from the impact of slower consumer spending recently as the effect of a series of interest rate rises has taken its toll.
It told its annual meeting that same-store orders at its core UK retail arm were 4% lower during the period.
However, this translated into a 1% fall in like-for-like sales, suggesting improvements to its supply chain were coming through.
The company blamed teething problems with its new supply system for a sharp fall in profits last year but it said today that this was now “stable”.
There had been some improvement to profit margins at the UK arm since an update in March, it added.
MFI’s Howden Joinery business saw like-for-like sales increase by 4% ‑ down from a 6% hike reported in early March.
The slowdown came as the firm focused on improving its profit margins.
Meanwhile, its French Hygena Cuisines business continued to show a strong performance with same-store orders 7% higher than last year.
Analyst Mark Charnock, who works at stockbroker Investec Securities, said the slower trends were expected.
He said: “The business is not out of the woods but there does appear to be stability now.”
Shares were 5.75p higher at 109.25 today.
References: EGi News 19/05/05
