Profits slump 70% at ailing MFI

MFI, THE struggling furniture retailer and manufacturer, yesterday reported pounds 25m pre-tax losses, a slump of 70 per cent on the previous year.

The group posted pre-tax profits before exceptionals of pounds 17.2m for the year to 24 April 1999, against pounds 58.6m the previous year.

Exceptional charges stood at pounds 42m, mainly as a result of the restructuring of its UK retail operations.

Sue Murphy, MFI finance director since 1984, also announced that she is to quit the company as the clear-out of top executives continues.

John Hancock, the current chief executive, was appointed in March after the resignation of John Randall.

The poor results, described as "tragic" by analysts, come after a series of profit warnings and weak performance in the out-of-town household goods sector.

Mr Hancock, formerly director of WH Smith's operations in the United States, said that he had come in with a brief to turn the group around and was "very open-minded" about MFI's future strategy.

An attempt to move upmarket into the mid-higher range, a switch to smaller formats on the high street and even a change of name have all been mooted as possible remedies to strengthen the ailing brand.

However, shares - which have more than halved since March last year - fell 12.5 per cent to close at 38.5p and analysts remained unimpressed, pointing to disappointing current trading figures with sales of continuing product lines down 12 per cent over the past 10 weeks.

Analysts, who said the future of the group looked uncertain, also moved to damp down imminent takeover speculation, claiming the share price is likely to fall yet further.

One analyst said: "It's a terrible set of results and current trading is really weak. Yet another turnaround in strategy is not the best thing that could have been said.

"The new chief executive is not putting forward any great insights. I don't think they can turn it around."

However, Mr Hancock remained upbeat, pointing to Asda and Tesco as examples of groups which had successfully reinvented themselves.

"A few retailers have found it necessary to change their brands but there is a much longer and more impressive list which have rehabilitated their brands," he said.

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