Furniture-to-beds group Homestyle has signalled the end of its financial crisis after sales jumped in the wake of a major restructuring.

Cash-flow problems had forced the owner of Harveys and Bensons to raise £100 million from new shares and forge an alliance with South African household goods group Steinhoff.

The scale of the crisis was shown in half-year losses of £25.4 million, but Homestyle said it was now on a more secure financial footing with orders since September up 13 per cent on a year earlier.

The turnaround was most significant at Harveys, where supply shortages, an inability to promote the business and low staff morale caused first-half sales to fall by £23.7 million and operating losses to reach £27 million.

But with new products and a publicity drive, Harveys lifted sales orders for the current financial year, up ten per cent in the 38 weeks to January 21.

It said Harveys had reestablished itself as a significant national furniture retail chain, although it said much remained to be done to maintain the recent sales progress through product innovation and targeted promotions.

The beds division, which trades under the Bensons, Sleepmasters and Bed Shed brands at 418 outlets in the UK, achieved sales of £94.9 million - in line with last year but insufficient to prevent a fall in operating profits to £2.9 million. The company has 19 outlets in the West Midlands.

That was blamed on competitive market conditions, as well as the loss of a number of senior executives and uncertainty surrounding prospects.

Homestyle said recent progress in the division had been positive but that sales orders for the 38 weeks were running one per cent lower than a year ago.

Chief executive Ian Top-ping said: "The injection of funds from Steinhoff has transformed the group and the balance sheet and put the company on a much sounder financial footing."

He said Harveys stores in particular had seen a marked improvement in trading as new product ranges, revamped stores and advertising helped re-establish itself as a major force.

The group's beds division, which trades under the Bensons, Sleepmasters and Bed Shed brands, also saw some improvement in trading, although sales progress here has been less marked. ..SUPL: