MFI to shed 1,470 jobs, close down 11 stores

MFI to shed 1,470 jobs, close down 11 stores

	Published : Wed, 01 Mar 2006 09:30 By : David Simms Print this Story

LONDON: MFI Furniture Group Plc. announced that it is downsizing -- closing down 11 stores, three depots and two factories and shedding 1,470 jobs -- after recording a pretax loss after exceptionals of 110.8 million pounds for 2005, compared with a pretax profit of 20.6 million pounds in 2004. Its total sales were up 2.5 per cent to 1.55 billion pounds.

Chief executive Matthew Ingle said 2005 was a very difficult year for the company. "We have a huge opportunity to rebuild this group. There is a lot to do and it will take time," he said.

MFI had recently sold its French Hygena chain and had secured an asset-backed loan of 150 million pounds for the restructuring. In the recent weeks, the company has been seeing better sales.

Ingle said the company will reorganise its U.K. business into three separately run businesses -- Retail, Howden’s, and supply.

As part of the restructuring, the company intends to increase the products to be sourced to third parties to 75 per cent from the current 50 per cent. It is selling its Sofa Workshop chain and close 11 of its 195 stores and three of its eight delivery depots. The focus will be on selling higher margin kitchens and bedroom furnishings. By end 2006, the company hopes to reduce the number of bedroom ranges from 53 to 31 and kitchen ranges from 63 to 38.

Sales of non-core products, such as bathroom furniture, will be progressively reduced. However, MFI will consider granting concessions for these products.

The restructuring is estimated to cost 34 million pounds in 2006, plus an additional 12 million pounds in related fees. Asset write-offs will be worth 36 million pounds. The company is hoping to have cost benefits of around 11 million pounds in 2006 and yearly savings of 23 million pounds from 2007.

Ingle said he intends to improve the poor customer service levels, expand the Howden's joinery unit adding some 30 outlets every year and restructure the group's supply operations.

MFI will not pay any final dividend for 2005 and the interim dividend of 2 pence per share is the total dividend for the year. MFI's shares jumped 6.7 per cent to 95-1/2 pence.