FURNITURE retailer MFI offered hope that it may have got to grips with the delivery problems blamed for its dismal trading over recent months.

The group, which employs 600 staff at its Hygena factory, in Stockton, said a review of the company's supply chain had achieved progress in a number of key areas, including cutting average bed delivery times from five weeks to two.

Chief executive John Hancock ordered the review after warning in September that MFI's UK retail operation would post a substantial annual loss because of problems with orders.

The group's winter sale, which starts on Boxing Day and lasts two to three months, will put the system to the test, but Mr Hancock said MFI's Howden Joinery operation successfully traded through its busiest period last month.

MFI will issue a full trading statement on December 2, but in the meantime, said its performance had been in line with expectations after the Howden division offset lower than expected sales of certain ranges of Hygena kitchen cabinets.

The group introduced a new supply chain system in March, but quickly experienced problems, resulting in lower stock availability and longer delivery times.

MFI thought it had resolved the difficulties in July, but they resurfaced the following month, prompting the review.

Analysts said the improvements to the supply chain may further fuel bid rumours surrounding the group.