DFS shares plunge on profit warning

Shares in DFS Furniture have plunged by 22% after the sofa specialist issued a profit warning.

The company blamed the general election for contributing to a sharp fall in demand in the second half of its financial year.

It now expects its underlying annual profits to be between £82m-£87m, below the £94.4m it reported in the previous 12 months.

Its share price tumbled by 55.25p to 196.75p

DFS said the market-wide trend was linked to uncertainty regarding the general election and "uncertain macroeconomic environment".

It said it had seen "significant declines in store footfall leading to a material reduction in customer orders".

Neil Wilson, senior market analyst at ETX Capital, said that the slowdown reported by DFS was "not surprising" given recent economic data.

"CPI 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," he said.

DFS said it experienced short-term fluctuations to demand and, confident of longer-term growth, had maintained its investment levels.

But Mr Wilson said: "The relative resilience of the UK in the six months after the referendum, and comparative slowing thereafter, seems to be mirrored in the fortunes of DFS."