Sanderson Design Group PLC (AIM:SDG) warned that demand has not improved since its last update and profits will undershoot earlier expectations.
Group sales for the year will be about £101 million (2024: £108.6m), a shortfall of less than 5% on earlier expectations, but the resultant mix will have a significant impact on full-year profitability, said the statement.
Sales of its luxury branded wallpapers and fabrics in the first two weeks of January are down 13% due to a downturn in consumer confidence in the UK.
As a result, fabric stocks are greater than expected with higher provisioning likely.
Contract markets in North America have also been soft, though the order pipeline is said to be encouraging.
Licensing is seeing good momentum, the statement added, but manufacturing runs have got smaller, affecting costs.
Added together, Sanderson now expects underlying pre-tax profits for the year ending 31 January 2025 to be in the region of £4.0 million to £4.8 million.
Net cash at the year-end is expected to be approximately £5 million and to build in the first half of the new financial year.
Shares dropped 8.5p to 45.5p.