Scs Share Discussion Threads

[jr93] 22/8/2022 13:59

Scs are upgrading all their stores ! 2 have been recently done and they are better then all the competitors

[niklol] 18/8/2022 14:41

And 5% again today

[deadly] 15/8/2022 18:47

Up over 5% today so some market interest.

[thorpematt] 08/8/2022 18:05

napoleon 14th
Thanks for posting, very well written article I thought. Sums it all up, very nicely.

I think it's clear that the outlook for the next year or 2 is uncertain for discretionary-spend retailers (particularly large item price purchases). However there comes a point (roughly around where Ben Graham would buy), that you have to argue the value on offer outweighs the shorter-term un-certainty.

There are plenty of good value stocks around at the moment of course. My strategy is to avoid the ones without the dividend to support the price and those with too much debt (since the cost of capital is rising and re-financing loans will erode the EPS).

SCS fits the bill on all 3 criteria of:-
1. Ridiculously cheap
2. Can very likely sustain a strong divi
3. Isn't paying interest on bank loans

[napoleon 14th] 08/8/2022 17:11

Small Companies Live 050822:

ScS (SCS.L) - Trading Update
We were expecting a profit warning here, however:

The board is pleased to announce that positive trading, strong margin, and effective cost management during the year means the Group now expects to report full year profit ahead of market expectations.

It seems Leo’s analysis matched orders but the deliveries is where the Trustpilot figures proved unreliable:

At 30 July 2022, the Group's order book was £71.7m (including VAT), £31.8m lower than at the same point in the prior year and £28.8m higher than at the same point in 2019.

This indicates far higher deliveries (= recognisable revenue) than Leo was seeing on Trustpilot. Impressive operationally for them to be able to deliver that order book profitably in this period. This has fed into profits:

After a challenging 12 months, the Board is pleased to be announcing profit ahead of market expectations for the year ended July 2022.

The Trustpilot figures have proven to be a much better guide of orders:

In recent months we have seen reduced in-store and online visitors resulting in a reduction in order levels, driven by the widely reported falling consumer confidence as a result of the cost of living pressures and economic uncertainty.

And, of course, the outlook is poor:

We expect the low consumer confidence will continue to adversely impact the Group in FY23.

Higher deliveries this year mean a lower order book entering FY 2023 than expected, but still:

However, the Group is in a strong position as we enter the new financial year, and strategic progress over the last 12 months means we are well positioned to take market share and maximise opportunities in a difficult environment.

So we continue to see a strong H1 weighting due to the order book with high uncertainty in H2. And their financial position means that have scope to survive where others fail. DFS, in particular, looks vulnerable, though it would be difficult for them to benefit from that as it would lead to an unwillingness on the part of consumers to pay deposits up front, and they probably wouldn't be allowed to buy them.

As ever, the thing to focus on here is the cash:

The Group's financial position remains robust, with cash at 30 July 2022 of £70.8m and no debt.

Here's the cash history pieced together from results statements:

27th July 2019: £57.7m

25th Jan 2020: £61.5m

25th July 2020: £82.3m

23rd Jan 2021: £91.8m

31st July 2021: £87.7m

29th Jan 2022: £87.9m

However, these figures are not much use without knowing how much of this cash is theirs and how much is customer deposits. Broker Shore put this as £43m net cash and we expect they have been given this by the company not calculated it. ScS have also spent a small amount on share buybacks.

Could it be we are at the same point in the cost of living crisis as we were with covid in March 2020? We now know it is going to be really bad, that government (and BOE in this case) have no plans to effectively tackle it and we have very little idea how long it will go on for. If so, then the bottom may be in on the share price, but one thing is for certain, FY 2023 is going to be pretty hairy.

Shore have cut 2022 revenue to £347.5m from £358m. FY 2023 forecasts have been cut from £375m to £349m. Perhaps the beat on profitability is due to the cost of living crisis that made advertising spend uneconomic. Profits are still likely in 2023 due to that order book, but FY 2024 could be loss-making. Shore FY 2024 forecasts look wildly optimistic with revenue of £359m versus £317m pre-covid.

However, Shore also “note the potential” for further buybacks next year. A business that is reducng share count by 10% a year and still remains capable paying a yield of c.9% will be attractive valuation for many.

[currencytrader1] 04/8/2022 11:28

Very strong business, I'm buying more on any weakness...

[davidosh] 04/8/2022 10:55

I get very annoyed when companies provide such limited information in RNS

ScS guides FY(July) profit ahead of market expectations.


But absolutely nothing in the RNS to show what those market expectations are!!!….Why do Directors and advisers treat investors so badly when it is so easy to provide full information?

The shares trade almost at the cash level but they do not make clear how much of the cash held is actually customer deposits....meanwhile the company are buying back shares and going forward there will be a dividend yield of nearly 9% but nobody likes them.

How much sales decline with the economy tightening is an unknown but that cash buffer means competitors will be hit first so market share will grow and demand at SCS should remain.

[farrugia] 04/8/2022 09:42

yes and seems to me that they still have big ammunition for their buyback program. That should help support the price. I like the fact that they are doing it slowly supporting the price without letting bailers to take advantage of the buyback program.

[brucie5] 04/8/2022 08:43

Still committed to share buy back...

[cwa1] 04/8/2022 07:42

Excellent...and less good respectively!

Full Year Trading Update

Full year profit for FY22 ahead of market expectations

ScS, one of the UK's largest retailers of upholstered furniture and floorings, today issues the following trading update for the 52 weeks ended 30 July 2022, ahead of announcing its preliminary results on 11 October 2022.

The board is pleased to announce that positive trading, strong margin, and effective cost management during the year means the Group now expects to report full year profit ahead of market expectations.

Order intake

FY22 saw like-for-like orders growth of 3.9% when compared to FY21, although FY21 was impacted by the effects of the COVID-19 pandemic. There was a 3.9% reduction in orders when compared to FY19, the last period not impacted by the pandemic.


Period Weeks Like-for-like order Like-for-like order
intake vs prior year intake vs FY19
1 August 2021 to 29 January 2022 1 to 26 16.6%* (3.1%)
--------- ---------------------- --------------------
30 January 2022 to 30 July 2022 27 to 52 (9.9%)* (4.9%)
--------- ---------------------- --------------------
1 August 2021 to 30 July 2022 1 to 52 3.9%* (3.9%)
--------- ---------------------- --------------------

*periods impacted by third national lockdown

At 30 July 2022, the Group's order book was GBP71.7m (including VAT), GBP31.8m lower than at the same point in the prior year and GBP28.8m higher than at the same point in 2019.

Outlook

After a challenging 12 months, the Board is pleased to be announcing profit ahead of market expectations for the year ended July 2022.

The Group's financial position remains robust, with cash at 30 July 2022 of GBP70.8m and no debt. The Group remains committed to the share buyback programme announced in March 2022 to repurchase and cancel up to GBP7m of its share capital. The programme is progressing well and as at 30 July the Group had repurchased and cancelled 1.24m shares.

In recent months we have seen reduced in-store and online visitors resulting in a reduction in order levels, driven by the widely reported falling consumer confidence as a result of the cost of living pressures and economic uncertainty.

We expect the low consumer confidence will continue to adversely impact the Group in FY23. However, the Group is in a strong position as we enter the new financial year, and strategic progress over the last 12 months means we are well positioned to take market share and maximise opportunities in a difficult environment.

Notice of results

The Group will publish its preliminary results for the 52 weeks ended 30 July 2022 on Tuesday 11 October 2022.

An analyst briefing will be held at 9.30am on the morning of the results, details of which will be provided in due course.

[laughton] 29/7/2022 14:13

Those covered the period to the end of January.
A lot's happened in the world since then.

[linton5] 29/7/2022 13:46

Read the interims from end of March if they weren’t lying this is a snip

[aishah] 29/7/2022 05:46

James Brumby - @JamesAtLangton

[davidosh] 29/7/2022 02:42

Why the 10% fall on no news?

[davidosh] 26/7/2022 14:26

I am not seeing the share price up at all. I think we need a trading update soon.

[niklol] 26/7/2022 13:34

SCS up nicely today on such a down day

[aishah] 25/7/2022 23:17

Come October energy prices will rise a lot so big squeeze on consumer spending. Can't see how big ticket items will be on the agenda. Dyor

[brucie5] 25/7/2022 22:48

Intriguing new interest from to US. From 0 to over 5%.

[finkie] 25/7/2022 10:50

small buy backs daily but not a heavily traded share so probably difficult to buy much more some days?? Surprised this is as low as it is, net cash exceeds market cap...

[cwa1] 25/7/2022 09:45

Huntington Management announced to have a stake of just over 5%...

[brucie5] 08/7/2022 16:45

They're still buying. Kind of makes up for my not doing so in quite the volume I'd like to at these absurd levels.

[diku] 06/7/2022 22:48

That rise on the closing bell will probably get reversed tomorrow...

[davidosh] 06/7/2022 22:38

That was pretty much the high point in the share price chart

[davidosh] 06/7/2022 22:35

We had a full year trading update in early August last year...

5 August 2021



ScS Group plc


Full Year Trading Update

Continued strong trading; full year performance for FY21 and outlook for FY22 ahead of market expectations

ScS, one of the UK's largest retailers of upholstered furniture and floorings, today issues the following trading update for the 53 weeks ended 31 July 2021, ahead of announcing its preliminary results on 5 October 2021.