MFI releases ‘appalling’ trading statement |
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Published
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Fri, 09 Sep 2005 09:05
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LONDON - Furniture retailer MFI has joined the retail industry in declaring that the gloomy conditions have affected its order book and that the second half of the financial year has seen orders dip by 15 percent in its UK retail stores.
The only cause for cheer and hope happened to be its Howden Joinery business and its French retail chain Hygena Cuisines, where sales are shaping up nicely. But its main business has been hit by a 6 percent fall in total sales for the year added to the 2 percent decrease in the first half of the year. Same-store orders in UK retail shops fell by 7 percent, but were compensated to some extent by an eight percent increase in sales at Howden Joinery plus a seven per cent rise at Hygena Cuisines. "Since the commencement of the second half we have experienced a deteriorating
market place, with associated increased volatility," MFI said in a trading update.
Analysts are predicting tougher times ahead as the UK retail sector is in the grip of gloom and doom. Richard Ratner, analyst at Seymour Pierce was shocked at the results unveiled by MFI and said that they were appalling, "On trading grounds it looks vastly overvalued, and with a hefty pension deficit a break-up would be very difficult, even if one values Howden at near 1 billion sterling. We also wonder for how long John Hancock's position is tenable," he observed. Ratner has a recommendation of 'sell' at a 90 pence price target. Investec Securities' analyst Mark Charnock echoed similar sentiments, "A collapse in orders in UK retail means likely 20-30 million pound full-year pretax profit downgrades," he said.
On Tuesday, the British Retail Consortium released figures for August, which showed that the retail sector was tough in that month. The BRC said that UK like-for-like sales decreased by 1 percent in August and the main cause for it was a concurrent decrease in furniture sales.
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