Worried about the turmoil in British politics? Ooh, lets's not buy a new settee.
It would be easy to mock DFS Furniture Plc's profit warning on Thursday. The company said its results would be below market expectations because the U.K. general election had put people off purchasing a new sofa.
But its warning is really just the next step from the end of Britons' love affair with clothing. Now the pain has spread. On top of this, faster inflation and slowing wage growth has put household goods in the firing line. As Gadfly has argued, spending on big-ticket items is sure to get pinched as consumers cut back. Demand for furniture and electrical goods also isn't helped by a weakening housing market.
Topps Tiles Plc had already lowered expectations. Dunelm Group Plc, the discount home furnishing chain, has consistently cautioned on tough trading conditions. The British Retail Consortium and KPMG said last week that sales of sofas had been particularly weak.
And furniture isn't the only area of the market to suffer. AO World Plc, the online consumer electronics retailer, recently warned of a slowdown in U.K. growth. The BRC and KPMG said fridges were another particular trouble spot. Add to this Merlin Entertainments Plc's caution earlier this week that recent terrorist attacks on the U.K. were deterring visits to some of its attractions.
Given the storm clouds gathering over DFS since the Brexit vote, it looks like Advent International Corp., the private equity group that acquired the furniture retailer in 2010 and floated it four years later, got out just in time: it offloaded its final holding in February at 228 pence per share.
Other investors haven't fared so well. The shares fell as much as 25 percent in early trading, to around 200 pence, joining a broader slump on Thursday as retail sales fell more than economists had forecast in May.
And there is likely to be more pain to come. The subtext of the recent disappointing news is that the U.K. consumer is finally succumbing to the pressures that have been building since the referendum.
That new corner sofa is only the latest casualty.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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