Furniture retailer Sterling Furniture Group saw its annual profits fall by more than a quarter in February 2017, despite an increase in sales of almost seven percent.
The Tillicoultry-based company said the 2016 acquisition of rival Forest Furnishing in a £ 4million deal helped push revenues to £ 56.7million (2016: 53, £ 2million).
However, the gross margin “declined slightly” over the year, which it blamed on changes in the sales mix as its strategy to expand its offering in the “difficult market” in which it operates.
The company said the Brexit vote and lingering uncertainty “had a negative impact on consumer sentiment and confidence” and a “mix of cautious consumer sentiment and still relatively low levels of activity real estate “has an impact on retail sales.
During 2017, Sterling said it continued to develop new departments, including flooring, housewares and interior design services, and launched a new fitted bathroom department covering design, supply and installation.
Sterling notes that Forest Furnishing had revenue of £ 4.72million from the acquisition through year-end in February 2017, and after-tax profits of £ 484,560.
The company said the cost of acquiring Forest Furnishing weighed on 2017 profits, which were down 27% from a year earlier to £ 1.82million (2016: 2.48million pounds sterling).
Sterling notes in the accounts now with Companies House, the profits for the year “were seen as a good result and an endorsement of the group’s overall strategy.”
Operationally, profit fell 24% to £ 1.94million (2016: £ 2.55million)
Following the acquisition of Forest Furnishing, the workforce grew to 657 in 2017, up from 626 in 2016.
Administrative costs rose 4% to £ 9.24million and distribution costs rose 12% to £ 15.85million.