ScS has launched a share buyback programme that could see it spend £7m over the next year.
The group has shareholder approval to buy about 10% of the group’s shares.
It says it will not buy more than 18,733 shares a day: a quarter of the average daily volume traded in February.
The move comes as it says it has returned to the historical pattern of making a loss or small profit in the first half of the year before making a profit in the second half as orders are delivered. In the six months to 29 January it saw a pre-tax loss of £3.6m compared with a profit of £17.7m a year earlier.
‘The group experienced a strong start to the year, with two year like-for-like bookings growth of 11.9% for the first nine weeks of the year. In autumn, the business experienced a reduction in footfall and conversion with consumers spending less on big ticket discretionary purchases. Encouragingly, the group traded well through the important winter sale period and overall order intake for the first half of the year was in line with the board’s expectations. One year like-for-like order intake growth was 16.6% for the first half of the financial year and two year like-for-like order intake was in line with that achieved in H1 FY20,’ it says.
‘The ongoing supply chain issues meant gross sales decreased 5.3% over the two years to £151.5m. As a consequence of the lower delivered volume, gross profit was £67.6m. As we forecast at the start of the year, gross margin was 44.6% (44.8% in H1 FY20) despite significant rises in product material and shipping costs, as the group has been successful in managing these pressures. The group is working closely with existing suppliers, and is also actively engaging with new suppliers, to maximise our value offering and to improve lead times for our customers. Our tight control of margin extends to other costs, which we have managed closely.
‘The group has returned to a profile more in line with prior traditional financial years, whereby the investment in advertising to support order intake over the key winter trading period results in costs in the first half of the year which support delivered sales in the second half of the year. These costs have led to the group making a loss before tax of £3.6m for the period, although positive underlying trading has ensured cash generation remained strong, with free cashflow of £4.4m. The group expects that the strong order book will support a profitable second half of the year and a full year result in line with current market expectations.’
