MFI eyes France as profits soar to pounds 88m

MFI, the furniture retailer, is to accelerate its expansion in France after a 33 per cent rise in sales there, writes Heather Connon.

'We are increasingly confident that we can establish a major chain in France,' Derek Hunt, MFI's chairman, said.

The furniture market in France was fragmented, with most retailers owning just one or two outlets, he said. Goods were generally supplied ready-assembled, rather than in flat-packs like most of MFI's products.

The group has had stores in France since it bought Hygena, the kitchen manufacturer, in 1982. It opened 12 stores last year, bringing the total to 46. This year it intends to open 20 stores.

In the year to April, the stores broke even after the costs of store openings. More than 80 per cent of the goods are manufactured by Hygena in Britain, which means the business is making a contribution to the group. Sales and profits were not disclosed, but Mr Hunt said sales in local currency were up 33 per cent, or 6 per cent excluding new openings.

MFI also intends to add nine stores in Britain, and refurbish others, which means capital spending will rise by at least 30 per cent

from the pounds 27.5m spent last year.

The plans were revealed as the group said that profits in the 53 weeks to April had risen from pounds 15.5m to pounds 87.8m, on sales 9.2 per cent ahead at pounds 659.4m. The results were distorted by a pounds 19.6m profit on the sale of its stake in Carpetright, while the previous year's figures included pounds 26.9m of flotation costs. Excluding these, profits were 61 per cent ahead.

Mr Hunt said sales of kitchens and bedrooms had been sluggish in the first half, but were stronger in the sale period in January and February. They are now running 13 per cent ahead of last year.

The group is experimenting with new products and display methods - including reducing the size of the mock-up kitchens - at two experimental stores called Homeworks.

Earnings per share were 10p, up from 2.3p last time. The final dividend is increased from 2.5p to 2.67p, making a total of 4p (3.75p). Mr Hunt said future increases would reflect any rise in earnings and the need to increase cover further from the current 1.9 times, excluding the Carpetright gain.

The Carpetright sale cut borrowings from pounds 61.5m to pounds 13.7m, 9 per cent of net assets.

(Photograph omitted)