Shares in ScS (SCS) have been whacked by a profit warning, which means they're now 21 per cent down on our buy advice (203p, 26 Mar 2015). The news is especially disappointing as it comes just weeks after a bullish half-year trading update, in which the furniture retailer reported the order intake was running 8 per cent ahead on a like-for-like basis in the first 33 weeks of the year. At the time, management even confirmed it had "good visibility" over the second half because of these order intake levels.
That makes today's profit warning all the more worrying. Management blamed the 16 per cent fall in like-for-like sales over the four weeks to 2 May on the warm weather over Easter and uncertainty over the general election. Full-year cash profits will now come in at £11m-£12m, a quarter lower than analyst forecasts. But management still intends to pay the planned £5.6m in dividends to shareholders.
