(Reuters) – Sofa specialist DFS Furniture <DFSD.L> on Thursday reported a significant drop in full-year pre-tax profit, hurt by a summer heat wave in its final quarter and an “exceptional downturn” in consumer demand.
The upholstery retailer, which was founded in 1969, said pre-tax profit fell 48.5 percent to 25.8 million pounds (£25.8 million) in the year to July 28, from 50.1 million pounds a year earlier.
Analysts had expected pre-tax profit of 41.62 million pounds, according to Refinitiv Eikon data.
DFS had warned on profit in July, blaming lower orders due to exceptionally hot weather and added that it expected tough market conditions for the next 12 months.
“Overall we expect the market to remain subdued into 2019, constrained by political risk and weak consumer sentiment,” Chief Executive Officer Ian Filby said in a statement.
Recent surveys showed British consumers were worried about the onset of Britain’s exit from the European Union, losing some of their confidence in early September.
“The group continues to face a particularly uncertain UK consumer market in the run up to Brexit in March next year…” DFS said.
Sofas are seen as a discretionary “big ticket” purchase and the fall in the value of the pound and a squeeze on wages has seen Britons cut back on non-essential purchases.
DFS said, however, that the market had recovered since the start of the new financial year, with growth in like-for-like orders for the first nine weeks and added that it was benefiting from deferred purchases in the prior financial year.
(Reporting by Noor Zainab Hussain and Tanishaa Nadkar in Bengaluru; Editing by Gopakumar Warrier, Bernard Orr)