February 8, 2018 / 7:55 AM / 10 months ago

UK's DFS Furniture says expects challenging 2018

LONDON, Feb 7 (Reuters) - British retailer DFS Furniture cautioned that its market would remain tough in 2018 as it reported a fall in first half sales, excluding acquisitions.

UK consumers are being squeezed by inflation and are seeing wages fall in real terms. Sofas are seen as a discretionary “big ticket” purchase and an industry survey published on Tuesday showed Britons cut back on non-essential purchases in January.

“We recognise that the living room furniture retail market is likely to remain challenging in 2018, given current consumer confidence levels,” DFS said on Thursday.

However, it maintained its financial outlook for the full 2017-18 year, forecasting modest growth in earnings before interest, tax, depreciation and amortisation (EBITDA) excluding acquisitions and a stronger sales trend in the second half.

Prior to the update, analysts had forecast 2017-18 EBITDA at 83.8 million pounds ($117 million), Reuters data showed, versus 82.4 million in 2016-17.

DFS’s gross sales, excluding the sales of Sofology which it acquired November 2017, were down 3.5 percent over the 26 weeks to Jan. 27. Gross sales were up 4.0 percent.

Shares in DFS, down 13 percent over the last year, closed Wednesday at 192.2 pence, valuing the business at 409 million pounds.

Last month Carpetright, Britain’s biggest floor coverings retailer, warned on full year profit citing waning consumer confidence.

$1 = 0.7188 pounds Reporting by James Davey; editing by Jason Neely

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