SFI denies cash crisis amid City fears

High street retailer SFI Group has rubbished claims it is on the brink of financial disaster following fears of a cash crisis.

Last week, a broker from WestLB Panmure publicly questioned if the company was in financial trouble, amid rumours it was failing to pay its bills.

The company immediatedly issued a statement to the market that said: "Trading in the first quarter continues to be positive with returns meeting our expectations.

"In addition to the 46 new openings last year we have opened eight new sites since June making a total of 22 in the past six months.

"Whilst this has put short-term pressure on creditors, SFI is actively managing the situation."

The share-price collapsed from 137p on Thursday, to 84p today (Monday).

Chief executive Andrew Latham told thepublican.com: "We are managing the situation.

"Like-for-likes are positive for the first 14 weeks of the year. There are some challenges out there, but balanced by some good business.

"Quite frankly, the share price is ridiculous."

Analyst Nigel Popham, from Teather & Greenwood, said that in hindsight, the company had probably over-expanded.

"They hit a short-term glitch, which they shouldn't have done," he said. "The impression I get is that they haven't managed their finances particularly well, or that given the rapid rate of expansion the financial base wasn't as strong as it might have been.

"I believe that Tim Andrews (finance director) in liason with Andrew Latham, is bringing financial disciplines to bear.

"The whole thing (share-price fall) is overdone. They won't be the first company to have a short-term problem. It's unfortunate that this has become public knowledge."

Greg Feehely of Old Mutual said the share-price reaction was completely without foundation while Paul Hickman said the market reaction to a "malicious attack" has been overdone.