MFI beats forecasts and reports buoyant sales: Furniture retailer's chairman remains cautious on future, but City is pleased

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The Independent Online
THE FURNITURE retailer MFI yesterday cheered the City with better-than-expected half-year results and news of buoyant trading in its January sale.

The group made pounds 44.1m profit before tax in the 28 weeks to 6 November, compared with a pounds 12m loss last time. The figures were, however, distorted by a pounds 19.6m gain on the recent sale of its stake in Carpetright and the pounds 24.7m cost of its flotation the previous year. Excluding these, profits almost doubled from pounds 12.7m to pounds 24.5m.

Derek Hunt, chairman, said: 'Furniture retailing continues to be highly competitive. We remain cautious about the outlook for consumer expenditure.'

But he added that sales of kitchens and bathrooms had been particularly strong. Most of these are manufactured by the group's Hygena subsidiary, so margins are higher than on other products.

MFI's shares rose 5p to 179p as analysts upgraded their profit forecasts. Tony Shiret, retail analyst with Barclays de Zoete Wedd, has increased his pounds 52m to pounds 68m for the year to April 1994 and pounds 81m the year after.

Mr Hunt warned against reading too much into the January sales figures. 'Two years ago we had a similar increase, but by the year-end it had disappeared,' he said. 'We view (the tax changes taking effect in April) with a lot of caution.'

The group has continued to shed jobs, with the number of employees - including part-timers as full-time equivalents - falling from 7,600 last April to 6,700 now. 'There have been efficiency gains, primarily in management and distribution,' said John Randall, finance director. The cuts, together with increased letting of surplus space, helped operating profits to increase 41 per cent to pounds 27.4m.

Interest costs dropped from pounds 18.3m to pounds 3m as the sale of the Carpetright stake cut borrowings from pounds 82.7m to pounds 39.7m, or 28 per cent of net assets. Earnings per share were 5p, or 2.8p excluding Carpetright, compared with a 4.3p loss last time. The interim dividend is 1.33p (1.25p).

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