The Investment Column: Harveys

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NO DOUBT we'll all need a lie down on New Year's day, but Rob Templeman, managing director of Harveys Furnishing, is so confident people will want to buy a new sofa just for the occasion that he's opening up nationwide bang on midday.

Whether there will be sufficient demand to justify the expensive move is a billion dollar question, Mr Templeman says. Yesterday he was warning that January, traditionally a great month for the furnishers, was looking rather risky this time round.

The group has had a tough year, posting flat half-year sales and falling profits following admin charges to cover rationalisation of warehousing and beefing up the management. The picture since the end of the period has been strong, however. Like-for-like orders are up 11 per cent.

The group is building on that by offering more discount deals in pursuit of volume rather than margin. But with 350 stores, Harveys lacks the growth appeal of rival DFS Furniture so it's doubling up capacity by constructing extra floors in on its sites. That takes time to feed into sales and disrupts current trading.

SG Securities expects pre-tax profits of pounds 13m and earnings of 12.9p per share this year, putting the shares, down 9p at 154.p, on a forward rating of 12. Given both the limited growth potential, that's about right