John Lewis Of Hungerford PLC Pre Close Trading Update (7747E)
November 06 2015 - 2:00AM
UK Regulatory
TIDMJLH
RNS Number : 7747E
John Lewis Of Hungerford PLC
06 November 2015
John Lewis of Hungerford plc
Pre close trading update
The Board of John Lewis of Hungerford plc (AIM:JLH) provides a
trading update ahead of reporting its results for the year ended
31(st) August 2015, which it expects to announce in late December
2015.
H2 trading
Based on unaudited management information, the Board expect to
report sales for the year to 31(st) August 2015 of GBP7.8 million.
The 5% increase over the GBP7.4 million reported in 2014 was
achieved from a strong trading performance in the final quarter. As
previously reported all three preceding quarters had been flat on
the comparable periods in the previous year. These sales figures
are based on the revenue recognition policy, which is to recognise
revenue at the point orders are despatched.
As previously announced, the Board expects the business to
achieve a nominal operating profit in the second half and therefore
to report an overall loss for the full year. Whilst disappointing
this is a consequence of investments made in line with the
strategic growth plan coinciding with an unexpected decline in
sales resulting from senior staffing changes within key showrooms
caused by factors outside the Company's control.
Current Trading
In the current financial year despatched sales and forward
orders for Q1 stand at GBP1.9m million (2014: GBP2.0 million).
However, the year-on-year comparison is distorted by changes to our
operating policy which has had the effect of delaying the point at
which some sales are reported. The background to this is provided
below and it has contributed to a significant increase in the
forward order book for deliveries in Q2 and beyond. This currently
stands at GBP1.3m (2014: GBP0.7m).
In recent years there has been a marked increase in the
proportion of business that is dependent on associated building
works being undertaken around the same time as the kitchen
installation. This now accounts for the majority of sales and the
Board identified that this was exposing the business to additional
cost from changes on site between the order being taken and the
site being ready. To address this an additional procedure has been
introduced requiring customers to accept responsibility for any
changes if orders are finalised and put into production before the
site is complete and surveyed. Previously such orders would have
been despatched to site or into storage at the customer's request
often resulting in additional costs if subsequent alterations
became necessary.
The impact of this change in policy is that orders are now
largely put into production only when sites are complete and fully
surveyed. Whilst this reduces the risk of additional costs and
improves the customer experience it also has the effect of
deferring the point at which some sales are recognised. This is
compensated by an increase in the forward order book for future
periods and for which customer deposits have already been taken.
Given the strong conversion of the forward order book into reported
sales the Board consider both measures should be taken into account
in assessing year-on-year sales trends.
A further update on current trading will be included in the
final results.
Enquiries:
John Lewis of Hungerford plc
Jon Rosby, Managing Director 01235 774300
Smith & Williamson Corporate Finance
Limited
Martyn Fraser 0117 376 2213
This information is provided by RNS
The company news service from the London Stock Exchange
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