ONE of Scotland's best-known furniture retailers is on course to grow turnover this year amid signs the recovery in the housing market is boosting sales.
Sterling Furniture Group welcomed indications that consumers are stepping up spending on furniture after it posted a dramatic increase in profits in its latest financial year.
The company made pre-tax profits of £1.1 million in the year to February compared with £35,000 in the preceding year.
Furniture retailers like Sterling spent years grappling with the fall-out from the slump in housing sales, which prompted many consumers to put off spending on big ticket items.
However, managing director Gordon Mearns said the company was on course to record an increase in annual sales in the year to February.
He said: "There's a slow, steady improvement in the market. There's a feeling there's definitely an increase in confidence out there."
Mr Mearns said the improvement in sentiment was being driven by the upturn in the housing market and a general increase in consumer confidence.
The company has increased sales in 14 of the last 16 months when compared with the same months in the preceding year.
Writing in the accounts for the year to February, directors said the austerity measures adopted by the UK continued to have a dampening effect on consumer demand, which they did not expect to improve significantly in the short term.
They expect high-value discretionary spending will lag behind everyday spend and will be "strongly influenced by any improvement in the housing market". However, the company signalled its confidence in the outlook for the market in the summer by expanding its Glasgow store.
Mr Mearns said the company had decided to proceed with a range of improvements that had been put on hold during the downturn.
Owned by the Knowles family, Sterling Furniture Group operates eight other outlets in Scotland, including the giant store the company opened in a disused mill in Tillicoultry in 1974.
Directors said the business still had to balance inflationary pressure from suppliers with downward pressure on sales pricing.
But the company managed to boost its margins in the last two financial years through tight management of the supply chain and improved internal efficiency.
Sterling Furniture Group cut total distribution and administration costs by about 8% annually, to £18.8m in the year to February from £20.5m in the preceding year.
Turnover fell by 1% annually, to £41.1m from £41.7m.
The group has some way to go to match the performances it achieved during the housing market boom that ended following the onset of the credit crunch in 2007.
It made £2.7m pre tax profit on £45.9m sales in the year to February 2008.
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