ScS share plunge underlines chilling downturn in furniture sales
Shares in ScS Upholstery, the furniture retailer, plunged almost 40pc today after the store group said that an unnamed credit insurer had stopped offering cover to a number of suppliers who sell sofas to the retailer.
The announcement, which relates to a technical aspect of the supply chain, is chilling evidence of the steep downturn in confidence in the furniture sector, which has seen sales hit by the credit crisis.
In an announcement to the Stock Exchange, ScS said that it had been notified that “one company has withdrawn credit insurance for ScS, affecting the working capital facilities of some of our principal suppliers”.
KBC Peel Hunt, the broker, said that other large furniture retailers have also had credit insurance pulled by the same provider.
ScS, which has almost 100 stores in the UK, has 14 furniture suppliers. It is understood that five suppliers have been affected by the withdrawal of insurance.
ScS said that it is “in discussions with each of the suppliers affected and is continuing to trade with them in the normal course of business whilst various financing options are being reviewed”.
Put another way, the agencies could not get insurance cover against the retailer being unable to pay its way if it booked TV slots for a large autumn TV campaign. So they stepped away.
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