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Interiors shares plunge after DFS warms of market ‘weakened beyond expectation’

DFS manufacturing upholsteryShares in the country’s leading interiors companies have dropped after DFS warned investors that trading had ‘weakened beyond expectation’ and profits would be hit.

Shares in the upholstery chain were down by 22% a few minutes ago. Rival ScS saw its shares drop by 9.19% as investors presumed it had also been hit by the downturn.
Dunelm Mill saw its shares drop by 6.17%, Carpetright by 1.52%, Laura Ashley by 1.4% and Walker Greenbank by 1.2%.
DFS said while it had expected a ‘softer market environment in the second half’ of its financial year ‘the trading environment has however recently weakened beyond our expectation, 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. 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.
‘Driven by these short-term revenue effects, we therefore now anticipate EBITDA over the full year to be lower than market expectations for the current year, and in the range of £82m-£87m [compared to last year’s £94.4m].
‘Notwithstanding this, 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. We expect continued strong cash generation that has allowed the recent announcement of a £20m special dividend in addition to our ordinary dividend.’
It will next update investors on 10 August.