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ScS Group upgrades expectations as stores rebound after reopening

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ScS Group PLC (LON:SCS) said full-year performance for the year ending in July will be ahead of market expectations, while the outlook for the following period is “substantially better” than current forecasts.

The retailer of upholstered furniture and floorings said it saw strong trading performance since reopening and a solid order book, which stood at £116mln at 12 June, £39mln larger than in 2020.

The online channel has also made “good progress” following the launch of a new website, with a year-to-date increase in order intake of 95.3% compared to last year.

Like-for-like order intake rose 10.6% in the 46 weeks ended 12 June compared to the previous period, but dipped 9.5% compared to 2019.

Due to restrictions, stores were closed from late December onwards, with the Scottish branches opening on 5 April, followed by English and Welsh sites on 12 April.

Cash at 12 June was £101mln with no debt and the firm has access to a facility of £20mln granted by the government as COVID-19 support.

Nonetheless, ScS has repaid the £3mln accessed under the furlough scheme during the current financial year.

It is also restarting dividends, starting with an interim payout of 3p per share to be paid next month.

“It is not the world’s biggest surprise to see SCS pre-announce, given how strong the DFS numbers were last week, but that should not detract from a very good start post reopening for SCS,” analysts at Peel Hunt commented.

“The shares are cheap and we believe this momentum is likely to continue, so we increase our target price from 275p to 340p.”

Shares jumped 11% to 322p on Wednesday morning.

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