THE INVESTMENT COLUMN : Sunshine spells success at Courts

Courts Furnishings is one of those rare UK retailers that has more shops overseas than it has at home. There are 90 branches of Courts in the UK, mostly in the south east, but 120 abroad, many in sun-drenched locations such as Fiji, Singapore, Belize and Mauritius. It is the overseas division which is proving the saviour.

Group pre-tax profits fell from pounds 25m to pounds 16m in the year to March, though last year's figures were boosted by a pounds 9m windfall from the sale of Courts' shares in its Singapore subsidiary.

Britain is proving tough going, with a sleepy housing market and job insecurity putting off the large purchases in which Courts specialises, such as sofas and tables. The UK division made operating profits of just pounds 3.5m on sales of pounds 119m last year, the worst performing part of the group.

Like other furnishing retailers, Courts is also trying to manage its flight out of town. It still has more than 50 branches on UK high streets. The plan is to build five new superstores per year over the next five years.

Overseas the picture is brighter, with like-for-like sales growth at 9 per cent running at nearly double the rate in the UK last year. Courts has already floated off four foreign subsidiaries, including Singapore and Mauritius. Others, such as Malaysia are planned.

An accounting change has reversed the company's usual conservative approach on the treatment of hire purchase sales, adding pounds 7.6m to pre-tax profits. The move has knocked Courts' reputation for conservative accounting, which, coupled with uncertainty over the UK outlook wiped 35p off the share price yesterday.

But at 750p, the shares are still on a heady rating of more than 20 times. With the UK market still in the doldrums there is probably better value elsewhere.