Stocks in furniture retailers fall as DFS warns of hard landing

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  • Shares in DFS Furniture PLC (LON:DFS) are down 13% after warning of falling orders.
  • Made.Com Group PLC (LON:MADE) shares tumble about 4% amid continued concerns about the sector.
  • Dunelm Group plc (LON:DNLM) is not immune to inflationary pressures, with shares down 0.6%.
  • The trend of lower furniture spending was highlighted in recent ONS retail sales figures

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DFS warns of painful effects of high prices

The fight continues for the rest of consumers’ available cash and furniture companies seem destined for a hard landing as budgets tighten amid the cost-of-living crisis.

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Sofa chain DFS is the latest to warn of the painful effects of rising prices on demand for its products, with pre-tax profit falling 43% to £58.5m in the year to the end of June.

Gone are the days when consumers hoarded extra cash during the pandemic to splurge on living room upgrades to add comfort to lockdowns. Now, in an era of make and fix, orders are expected to decline by as much as 15%, even compared to the pre-Covid period.

Not only is DFS having to deal with a slowdown due to purchases that were brought forward during the pandemic, but now, as household bills mount for essentials like food and heating, a soft new sofa is a luxury many consumers have. are happy to do without.

No wonder DFS shares are down about 13% today as investors weigh the pile of problems facing the retailer.

Made.com shares fall

Industry concerns have driven Made.com’s share price down nearly 4% and year-to-date down 95%. This evaporation of value caused the company to be kicked out of the FTSE All Share in the latest remodel.

Made.com has already highlighted that it has been very difficult to attract new customers while maintaining decent margins and said it expects gross sales to fall between 15% and 30% this year.

It is trying to navigate this extremely challenging period by cutting costs ahead of an expected capital increase later this year.

Dunelm earnings

Even Dunelm, which reported fluctuating annual earnings and sales yesterday, is unlikely to be immune from the massive budget squeeze amid rising input costs, and its share price also dropped today.

It prides itself on a value tag, but the company said it cannot rule out price increases in the coming months, which could make its customers think twice about spending on non-essential household items.

Home goods store volumes fall

This trend has already been highlighted in ONS retail sales data for July, which showed that home appliance store volume dropped 0.4%, mainly due to declines in furniture and lighting stores.

There will be a keen eye trained on the latest August snapshot due out tomorrow, but indications are that accessibility concerns will continue to plague.

Signs are that consumers will have cash on hand for one last burst of summer fun before what is expected to become a rather dismal winter of soaring household bills.”

Article by Susannah Streeter, Senior Investments and Markets Analyst, Hargreaves Lansdown

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