The sale of the loss-making MFI furniture chain cost £187m in write-offs, owner Galiform revealed today.
The 200-store business, Britain's biggest furniture retailer, was sold to the private equity firm Merchant Equity Partners last September for a nominal £1, following mounting losses.
Galiform also paid a "dowry" of £126m, including £52m paid by customers as deposits for their orders, to rid itself of the MFI business.
But shares in Galiform, which owns the builders merchants Howden Joinery, jumped 7% to 136.25p today despite the hefty write-off, after reporting a better-than-expected 35% surge in profits for 2006.
Taxable profits, excluding exceptional items, rose from £42.5m to £57.2m, although profit from continuing operations was down from £28.9m to £25m.
Galiform chief executive Matthew Ingle said 2006 had been a year of "major transformation" for the group.
"With the disposal of MFI Retail, we are now focused on the successful Howdens business which continues to enjoy a strong position in a rapidly changing market.
"Going forward, we have great opportunities to grow Howdens, capitalising on its unique strengths."
He said Howdens has continued to trade well in the opening two months of 2007, with sales up 8.2%.
The trend from "do it yourself" to "done for you" continues to be reflected in the favourable market conditions, he added.