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DFS Furniture expects lower 2018 profits after heatwave and supply issues hit sales

DFS Furniture sees like-for-like sales falling 3% in the 23 weeks to July 7
Shares in DFS fell in morning trading

DFS Furniture Plc (LON:DFS) said it expects a decline in 2018 earnings after the UK’s heatwave and supply issues hit fourth quarter sales.  

The furniture retailer estimated underlying earnings (EBITDA) for the year will be "below" the £82.4mln reported in 2017.

The company said in the final quarter it suffered a disruption to ships bringing made-to-order products from the Far East, while the hot weather led to “significantly” lower-than-expected order intake.

READ: DFS Furniture shares jump as it sounds confident note on outlook

As a result, like-for-like sales are expected to fall 3% in the 23 weeks to July 7 and drop 4% in the 49 weeks to the same date.

A slowdown in the housing market and a tough retail market also contributed to weaker sales.

DFS said: “We continue to expect that the furniture retail market will remain challenging over the next twelve months, given ongoing reduced consumer confidence levels, although we would expect some alleviation of current short-term demand effects.”

The group believes investments in its supply chain and the recent acquisition of Sofology will provide “benefits to earnings that we expect to help mitigate the challenging sales environment”.

READ: DFS Furniture and Sofology couch their differences over branding by agreeing takeover deal

DFS said it has a track record of capitalising on adverse trading conditions to build its market share and believes its cash generation and long-term growth prospects will drive “attractive returns” for shareholders.

Shares fell 2.8% to 193p in morning trading. 

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