DFS Furniture Plc (LON:DFS) saw its shares fall first thing as the sofas retailer reported a 13% drop in full-year underlying earnings, blaming "very challenging" markets in its second half.
In early trading, DFS shares were down over 5.5%, or 12.5p to 212.5p.
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The small cap firm – which had warned on profits in June – said its underlying earnings (EBITDA) fell to £82.4mln in the 52 weeks ending July 29, down from £94.4mln a year earlier and at the lower end of the company's forecasts.
The group said gross sales rose 1.1% to £990.8mln, with revenue up 0.9% to £762.7mln.
Ian Filby, DFS’s chief executive said: “We have continued to make good strategic progress across all our key areas of growth, while our financial performance reflects the current challenges of the UK furniture market.”
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But, he added: "Our recent strategic investments and operating efficiency programme support our confidence in our ability to deliver modest profit growth and cash returns in the current financial year and we continue to have excellent prospects for the long term."
Reflecting that confidence, DFS hiked its total ordinary dividend by 1.8% to 11.2p, and is also paid a special dividend of 9.5p in the year.