MFI stock collapses after delivery chaos

MFI Furniture yesterday admitted the botched introduction of a new computer system had left hundreds of customers waiting months for the right furniture to be delivered and would cost the group £30m to put right.

MFI Furniture yesterday admitted the botched introduction of a new computer system had left hundreds of customers waiting months for the right furniture to be delivered and would cost the group £30m to put right.

The company's shares collapsed by more than 17 per cent after it explained the full extent of the problem and noted that tough competition in kitchens and bathrooms would cut a further £20m from profits this year.

MFI had already spent £50m to install a computer system to track products from manufacturing to customer delivery, which it hoped would save money by reducing the need to hold stock in warehouses. In the event, the company has repeatedly run out of products, leaving customers waiting for deliveries that never arrive.

Horror stories yesterday included customers receiving only the doors and drawer-fronts of wardrobes, and of dining tables delivered without their full complement of chairs. One customer told BBC News Online: "Our kitchen did arrive but with half the units missing. Four weeks later the units arrived - but with missing doors." And in June, a pyjama-clad customer launched a lie-in protest after a bed failed to arrive after seven weeks.

John Hancock, the chief executive, said the new computer system had already been delayed by five months when it went live at Easter. "We have had a certain number of teething problems, as one would expect when you put something like this in," he said. "What became clear yesterday was that we had been focusing on dealing with the symptoms, and hadn't identified fully the causes. Dealing with these will take longer than we had expected."

MFI shares, which had already fallen by a fifth in the past three months, plunged another 22p to 104.5p. Profits from the core UK retail business have been under pressure as DIY warehouses such as B&Q boosted their ranges of kitchens and bathrooms. The latest profits warning led analysts to change forecasts of a £15m profit in UK retail to a £30m loss for the year.