DFS profits hit by General Election and warm weather

The Doncaster-based group confirmed that profits will take a hit following weaker trading at its stores.

The retailer reported "significant" declines in store footfall and customer orders between April and June.

Weaker trading follows a strong first six months of the year, when sales rose 7 per cent, which meant that total revenue rose 1 per cent in the year to July 29.

DFS anticipates full-year operating profit will be lower than previous market expectations and will come in between £82m and £87m.

In a stock market update, the retailer said: "The second half has been weaker than we expected owing to significant declines in store footfall and customer orders across April, May and June.

"We believe this to be an industry-wide issue, resulting from the uncertain economic environment and unexpected General Election, exacerbated by warm weather in May and June."

On Wednesday sofa chain ScS said second half orders have slumped by 5 per cent as it battles against tougher trading.

ScS said the like-for-like decline came as it was hit by more difficult retail conditions and failed to match up to strong sales a year earlier.

The economy has been thrown into doubt following the shock outcome of the General Election which resulted in a hung parliament. In times of doubt, consumers tend to put on hold the purchase of big ticket items such as a new three piece sofa.

DFS described the UK furniture market as "very challenging" with an uncertain outlook.

It said it will seek out efficiency savings as revenue growth becomes harder to achieve in the short term.

However, the firm said that its summer sale started satisfactorily in July.

The group said: "We remain focused on our growth strategy to deliver substantial long-term returns for our shareholders.

"Although revenue growth is likely to be harder to achieve in the short term than in the recent past, we have identified opportunities to drive operating efficiencies and product margin growth."

Last week DFS acquired rival Sofology in a £25m deal and will take over its chain of 37 UK stores.