Scotland's largest privately owned furniture retailer has managed to maintain sales but at the expense of profits.

Sterling Furniture says the increase in VAT in January, higher shipping costs and lower credit availability contributed to a 59% drop in profitability in the year to 28 February.

Pre-tax profits dropped from £1.5m to £616,000 as the chain delivered on sales, with turnover dropping just 1.6% to £47.5m. It says it was unable to pass on the higher costs and the VAT rise saw a notable drop in consumer activity.

'The continued squeeze on incomes and low credit availability kept pressure on the market [during the] year, with big ticket luxury products suffering most. Against this backdrop Sterling performed well for most of the year, with positive like for like sales until the 2011 VAT increase, when the market got distinctively weaker,' the company revealed in its accounts.

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