Investment column: Courts comes bouncing back

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The Independent Online
COURTS, the furniture retailer, may have axed Bruce Forsythe from its television advertising, but shareholders could still be in for a "Brucie Bonus" if the company keeps trading as solidly as this. Full-year profits of pounds 32.3m were ahead of expectations and were achieved in spite of currency effects and the financial turmoil in the Far East which accounts for a hefty chunk of sales.

In the UK, same-store sales were ahead by 11.7 per cent on the previous year on a like-for-like basis. This is impressive given recent profits warnings from rivals such as DFS, MFI and Carpetright. These companies have blamed slowing sales on higher interest rates and the poor weather over the Easter holiday weekend, and Courts too could have been a victim. But though its sales growth has slowed to around 5-6 per cent, on current trading it is still gaining market share at these levels.

What is the secret? Courts claims its larger stores enable it to offer a wide range of furniture, carpets and fabrics, while most of its rivals concentrate on just one sector. Added to this "one stop shop" approach is its new line in electrical goods which are pulling in more shoppers even though the costs of the roll-out means they are unlikely to be a moneyspinner just yet.

Elsewhere, operating profits in the Far East fell by 25 per cent. But total sales still grew so profits should bounce back when the exchange rates stabilise. The flotation of the Malaysian business has been postponed due to the turmoil but will be re-examined later.

Courts shares have had a poor year, but they bounced back by 17.5p to 402.5p yesterday on the release of the figures. On current-year profit forecasts of pounds 36m, the shares trade on a forward rating of 13. For a well- managed company in an unloved sector, that looks good value.