LONDON (Reuters) - British retailer DFS Furniture warned on Thursday that it would not meet profit expectations for the current year, blaming a dip in demand related to customer uncertainty about the economic outlook.
Its profit warning sent shares in the upholstered furniture retailer down as much as 22 percent in early trading.
With furniture seen as a "big ticket" discretionary item the profit warning will add to evidence that Britons are facing an increasingly tight squeeze in their spending power.
Official data published this week showed British workers' earnings after inflation shrinking at the fastest pace since 2014.
DFS said the trading environment had recently weakened more than it expected, 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," it said.
The firm said it now expected to make core earnings of 82 million-87 million pounds for its year to end-July.
Analysts were previously forecasting 96.1 million pounds, according to Reuters data, up from the 94.2 million pounds made in 2015-16.
DFS said it has maintained its investment in the business and was confident of outperforming the market over the longer term.
"We believe our expectations for the next financial year (2017-18) are realistic based on consumer confidence remaining broadly in line with current levels, given its consequent impact on upholstery demand," it said.
At 0718 GMT shares in DFS were down 55 pence at 198 pence, valuing the business at 416 million pounds. Prior to the update the shares had risen 15 percent in 2017.
"While it is possible DFS will bounce back ... we expect investors to be cautious in the short term," said analysts at Jefferies, who, nevertheless, maintained their "buy" recommendation.