HOME furnishings group Courts is to hold a business review after profits were affected by the falling US dollar.

The impact of currency fluctuations came to light in figures for the six weeks to January 11, as a four per cent rise in like-for-like sales from overseas business became a fall of eight per cent.

Courts said operations in the Caribbean and the Far East, where currencies are linked to the dollar, were badly hit.

A Courts spokesman said: "I think everybody has been surprised by the weakness of the dollar.

"We did not expect it to depreciate quite so rapidly."

The company, based in London, saw its share price fall five per cent, or 17p, to 311p. It has 352 stores in 20 countries - about 100 of them in the UK.

Profits for the first nine months of the financial year have been reduced by about £4m due to currency movements.

Analysts are expecting pre-tax profits for the year to March 31 to be £15m, down from the range of between £25m and £27m previously forecast.

Profits are also likely to be affected by increased borrowing costs and exceptional charges of £5m for renegotiating a credit facility.

The weak dollar offset an improvement in the performance of its UK business, which saw like-for-like orders booked in the last seven weeks rise 31 per cent. Gross profits also rose 27 per cent on a like-for-like basis during the same period.

Courts has appointed Cavendish Corporate Finance and Merrill Lynch to advise the company on its strategic options.

The spokesman said: "Merrill Lynch has been appointed to carry out a strategic review of all the options available to the business, including regionalisation, restructuring of finance and the possible sale of assets."

The board has said it is likely to reorganise the group on to a regional basis in a bid for greater financial efficiency.

It will also assess the merits of a separate flotation of a holding company for the Caribbean business.