ANALYST REACTION

Sofa specialist DFS saw its share price hammered, closing down by more than a fifth, after it warned over profits, blaming factors such as the “uncertain macroeconomic environment” for weak trading at its stores.

The retailer said that since March it has seen “significant declines in store footfall”, leading to a material reduction in customer orders.

As a result it now anticipates full-year core earnings to be lower than market expectations and in the range of £82 million to £87m.

DFS said: “We believe these demand effects are marketwide, in line with industry indicators, and are linked to customer uncertainty regarding the general election and the uncertain macroeconomic environment.

“As stated previously, the upholstery market does see short-term demand fluctuations from time to time, within an overall historical trend of long-term growth.”

Consumer confidence has been battered by a series of factors triggered by last year’s vote to quit the EU.

0 The retailer believes it can ‘outperform the market’ over the longer term

“The relative resilience oftheukinthesix months after the referendum, and slowing thereafter, seems to be mirrored in the fortunes of DFS.”

NEIL WILSON, ETX CAPITAL

The referendum result saw the pound collapse and inflation rocket, ramping up costs for British businesses and eroding consumer spending power.

However, DFS added: “We have maintained our investment in the business and we are confident that we will outperform the market over the longer term, driven by our scale, business model and proven growth levers.

“We believe our expectations for the next financial year are realistic based on consumer confidence remaining broadly in line with current levels, given its consequent impact on upholstery demand.”

Neil Wilson, senior market analyst at ETX Capital, said: “These are uncertain times for the British consumer, who is shunning big purchases as they tighten the purse strings.”

He also noted the fall in the firm’s share price as a result of the profit warning.

The analyst stated that “investors turned their back on a company that is gravely exposed to increasingly