John Lewis of Hungerford to cut cost base

The first half of the year has seen further investment in the existing showroom estate as the company gears up for growth
John Lewis of Hungerford designs, manufactures, retails and installs kitchens, bedrooms, freestanding furniture and architectural components
The operational changes include moving line responsibility for the installations department to the head of Operations

Kitchens firm John Lewis of Hungerford plc (LON:JLH) expects to save around £300,000 a year after acting to cut its cost base.

The projected savings are expected to kick in from the beginning of the next financial year, in September, and will result from a number of positions being made redundant or merged.

“Although this has been a difficult process the board are determined to return the business to a position of generating positive shareholder returns,” said John Lewis, interim chairman of the company that bears his name.

The cuts were announced as part of interim results that showed turnover in the six months to 29 February slightly ahead of the previous year.

Turnover rose to £3.13mln from £3.10mln in the same period of last year, but the improvement could have been bigger had it not been for a number of orders linked to related building works being deferred to the second half.

The lower sales growth coupled with costs associated with gearing the business for future growth contributed to a loss before tax for the period of £430,000, compared to a loss of £204,000 the year before.

The deferral of some orders does mean that the order book is looking healthy. The company said the aggregate of its dispatched sales and the forward order book, i.e. committed orders for which deposits have been taken, stood at £4.5mln at the end of February, up 5% year-on-year.

Cash at bank and in hand at the end of the period was £496,000, down from £863,000 a year earlier, inclusive of customer deposits and advance payments.

The company's bank and other loans at the end of the period were £835,000, repayable within 10 years.

“A further update on trading will be provided in June, following completion of the third quarter, ending 31st May 2016; however, we expect that reported sales for the third quarter will be around 12.5% higher than the previous year at £1.86 million,” John Lewis said.

“Although the second half year is traditionally our stronger trading period we consider it unlikely that the losses in the first half will be recovered in full and therefore expect to report a loss for the full year,” he added.

Shares dipped 0.07p to 1.06p on the results.

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