DFS shares plunge following profit warning

Doncaster furniture giant DFS saw its shares plunge by 22% after it issued a profit warning this morning.

The firm, which blamed current political and economic uncertainty for contributing to a sharp fall in demand in the second half of the year, saw its share price drop by 55.25p to 196.75p.

DFS said this morning that it would not be meeting profit expectations this year due to “significant” declines in footfall and the current political climate.

DFS had already predicted a softening of the market, but it has now weakened far beyond expectations, it said.

It said that the material reduction in customer orders was down to customer uncertainty around the General Election and the uncertain macroeconomic environment.

The retailer expects EBITDA over the full year to be lower than market expectations for the current year, in the range of £82m-£87m.

Despite this, it said, it still expects strong cash generation which has allowed the recent announcement of a £20m special dividend, in addition to the ordinary dividend.

In a statement it said: “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 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,” it said.