Worries for furniture sales after VAT rise

Feather & Black reported its biggest ever week to January 3, with sales up 54% and margins ahead of last year, while Furniture Village reported sales in the three days in the run-up to New Year’s Eve were up 19%. Danish retailer Jysk reported December was 25% up year on year, while Lombok said it was in “positive territory” over the Christmas period.

Furniture Village managing director Peter Harrison said: “VAT certainly had an influence. The rise in VAT became a reason to buy.”

Feather & Black co-founder Adam Black said the retailer had traded well since autumn and “it’s the aggregation of marginal improvements”. He added: “We’re doing a lot of small things better and there are fewer competitors out there.”

Black said online sales took twice as much as Feather & Black’s largest store, up 150%.

“The strength of the internet is changing the business strategy,” he said. “With the cost of opening a new store, we might be better off ploughing the money into doing more online. If you’d asked me a year ago, I’d have said we needed 50 stores; now I’d say we need 40.”

Retailers remain cautious about the year ahead, though. ScS financial director Ron Turnbull said the retailer had “broadly achieved what we set out to” over Christmas and the New Year Sales. However, he added: “I think the jury’s still out at the moment and while trade may be OK for the next two to three months, we’re still looking at what will happen with a new government.”

Harrison also expressed caution for 2010, saying “there are too many things against huge optimism”.

Lombok chief executive William Landale said: “This will be a year of two halves. We’re still cautious about the second half because of the first Budget of a new government, whoever they may be - that will be a killer.”

Black said he was unsure how 2010 would play out, but added: “Furniture was the first into recession and it will be the first to come out of it.”