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UK's DFS Furniture plunges as retailer warns on profit

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(Reuters) - Shares in DFS Furniture dived more than 16% on Thursday after the British sofa retailer warned of lower profits this year, as the cost-of-living crisis dented demand for big ticket items and supply chain issues hurt output.

The company, which sells living room furniture, said it was seeing lower order volumes, similar to the wider UK furniture market that has seen a change in demand patterns.

British shoppers facing a surge in inflation cut their spending in May by the most since the country was in a coronavirus lockdown in early 2021, according to a survey this week by the British Retail Consortium, with furniture, electronics and other expensive goods being the hardest hit.

"The ongoing COVID linked supply-chain disruption, combined with lower order intake since April has led to lower levels of production and deliveries relative to our previous expectations," the London-listed company said.

Britain is facing its worst cost of living crisis in three decades amid spiralling energy prices, higher taxes and issues surrounding supply chains.

DFS added that it was "difficult" to forecast consumer behaviour over the next twelve months.

Brokerage Jefferies, which cut its estimate on DFS's annual pretax profit by 36%, said the outlook is clearly challenging, with record low consumer confidence levels, the cost-of-living squeeze and uncertain by-category spending trends.

The company now expects underlying profit before tax and brand amortisation between 57 million pounds and 62 million pounds ($71.28 million-$77.53 million), lower than a prior forecast of 66 million pounds-96 million pounds.

Shares of DFS were down 16.2% at 155 pence by 0752 GMT, and were set for their biggest intraday percentage decline since March 2020.

($1 = 0.7997 pounds)

(Reporting by Shanima A in Bengaluru; Editing by Shailesh Kuber)

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