UK retailer DFS Furniture warns on profit

LONDON: British retailer DFS Furniture warned on Thursday that it would not meet profit expectations for the current year, blaming a dip in demand related to customer uncertainty about the economic outlook.

Its profit warning sent shares in the upholstered furniture retailer down as much as 22 per cent in early trading.

With furniture seen as a “big ticket” discretionary item the profit warning will add to evidence that Britons are facing an increasingly tight squeeze in their spending power.

Official data published this week showed British workers’ earnings after inflation shrinking at the fastest pace since 2014. DFS said the trading environment had recently weakened more than it expected, with significant declines in store footfall leading to a “material reduction” in customer orders.

“We believe these demand effects are market-wide, in line with industry indicators, and are linked to customer uncertainty regarding the general election and the uncertain macroeconomic environment,” it said.

The firm said it now expected to make core earnings of £82 million-£87 million ($106m-$111m) for its year to end-July.

Analysts were previously forecasting £96.1 million, according to Reuters data, up from the £94.2 million made in 2015-16.

DFS said it has maintained its investment in the business and was confident of outperforming the market over the longer term. — Reuters