MFI in favour despite sales caution

INVESTORS bought into furniture retailer MFI, despite its warning that sales growth would slow. The firm, which sells ready-to-assemble furniture for kitchens, bedrooms and home offices, said like-for-like sales growth would probably fall to single digits in its second half, from 12% in the first, as higher interest rates dampened spending.

But it said it would still hit the City's full-year targets. Refurbished stores were topping expectations. The shares rose 5 1/2p to 118p.

A loss-making business with high debts in 1999, MFI has benefited from Britain's long-running housing boom. But it has also made internal improvements, bringing in design guru Terence Conran to update its stores and introducing new products such as bathrooms and sofas as part of its 'every room in the home' strategy.

Profit before tax rose to £46.2m in the 24 weeks to 15 June, from £40.6m last time. That was at the top end of City forecasts. MFI, which has around 30% of the UK's kitchen and bedrooms market, said sales were around 40% higher at the 39 UK retail outlets it refurbished during its first half. Like-for-like sales at the UK retail stores rose 9.7%.