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You can find the current article at its original source at https://www.theguardian.com/business/2017/jun/15/dfs-profits-uk-spending-squeeze-election-brexit-uk-consumers
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| DFS warns over profits amid election and Brexit uncertainty | |
| (35 minutes later) | |
| DFS said on Thursday that it would not meet profit expectations for the current year, blaming a dip in demand on customer uncertainty caused by the UK election and concern about the economic outlook. | DFS said on Thursday that it would not meet profit expectations for the current year, blaming a dip in demand on customer uncertainty caused by the UK election and concern about the economic outlook. |
| Its profit warning sent shares in the furniture retailer down as much as 22% in early trading. | Its profit warning sent shares in the furniture retailer down as much as 22% in early trading. |
| Furniture is seen as a “big ticket” discretionary item, and the profit warning will add to evidence that Britons are facing an increasingly tight squeeze on their spending power. | Furniture is seen as a “big ticket” discretionary item, and the profit warning will add to evidence that Britons are facing an increasingly tight squeeze on their spending power. |
| Official data published this week showed British workers’ earnings after inflation shrinking at the fastest pace since 2014. | Official data published this week showed British workers’ earnings after inflation shrinking at the fastest pace since 2014. |
| DFS said the trading environment had weakened more than it had expected recently, with significant declines in store footfall leading to a “material reduction” in customer orders. | DFS said the trading environment had weakened more than it had expected recently, 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. | “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 £82m to £87m for its year to the end of July. Analysts were previously forecasting £96.1m, according to Reuters data, up from £94.2m in 2015-16. | The firm said it now expected to make core earnings of £82m to £87m for its year to the end of July. Analysts were previously forecasting £96.1m, according to Reuters data, up from £94.2m in 2015-16. |
| DFS said it has maintained its investment in the business and was confident of outperforming the market over the longer term. | 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. | “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. |
| “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. | “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. |