FURNITURE retailer ScS Upholstery plc watched as £21.6m was wiped off its share value yesterday on the back of its third adverse profits warning in as many months.

The Sunderland group's share price slumped 64.5p, or 28 per cent, to 169p after telling the City that it was on course to make "no less than £8m" - dramatically down on predictions of nearly £12m for the year.

The firm has called in accountants Ernst and Young to help with a full-scale investigation into how the latest financial blow occurred.

ScS has also pulled chairman Mike Browne out of semi-retirement to spearhead the probe.

Mr Browne, one of the company's biggest shareholders, was hit hard by the plummeting share price.

He owns about 8.8 million of the 33.49 million ScS shares in circulation and saw nearly £5.68m erased from his personal fortune.

He told The Northern Echo he was not aware of the effect on his shareholding but would work full time to find the source of the problem and get the company back on track.

He said: "This is not a pleasant experience and I am going to make sure it does not happen again.

"We will leave no stone unturned."

The management team has enjoyed a considerable period of stability. Mr Browne was appointed chairman in February. He joined the group in 1975, led the management buyout in 1993 and the flotation of the group four years later.

David Knight joined in 1987, was promoted to managing director in 1999 and chief executive last year.

Sacha Beere came on board in 1996 as financial controller and was promoted to finance director in 1999.

Despite this, Mr Browne said a shortfall had appeared when the end-of-year results were being pulled together that had squeezed the company's margin down from 48 per cent to 45 per cent.

He said: "It means that, somewhere along the line, we have made some mistake in some area of the business."

Anthony Grezo, investment director at Newcastle brokers Laing and Cruickshank, said ScS had positive expansion plans and anticipated growing from 53 stores to 70 by the end of next year.

But, he said: "The company seems to be experiencing growing pains and exacerbating that is the fact that sales appear to have peaked for the time being."

The overall picture is far from bleak. A return of £8m profits is extremely good, despite ScS's high standards and expectations.

Since floating in 1997, the group has raised pre-tax profits threefold.

And a note of optimism was sounded yesterday by the company, which said like-for-like sales in the first eight weeks of the current financial year were up 4.6 per cent on the same period last year.

Shareholders will not be completely despondent, they will still receive the predicted ten pence dividend for the year.