DFS issues profits warning amid economic and political uncertainty
Sofa chain DFS has warned over profits after the General Election and an "uncertain macroeconomic environment" led to 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 operating profit to be lower than market expectations and in the range of £82 million to £87 million.
DFS said: "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."
Consumer confidence has been battered by a series of factors triggered by last year's vote to quit the European Union.
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."
Shares in DFS tanked on the news, crashing 17% in morning trading to 207.2p.
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.
"Inflation has accelerated to 2.9%, while wage growth is slowing. Real wages are falling. If the gap continues to widen then the likes of DFS could suffer further as spending takes a knock.
"Undoubtedly the uncertainty around the General Election and Brexit means people are delaying big ticket purchases."