Upmarket interiors firm Sanderson Design has warned over tumbling profits amid weak demand from shoppers in January.
The company, which was awarded a royal warrant last month, said profits for the year are set to fall by more than half as a result.
Sanderson told shareholders that group sales are set to be around £101 million for the year to January, dipping from £108.6 million a year earlier.
It said this is a shortfall “of less than 5%” compared with its previous guidance.
The board remains confident in the group's future performance once trading conditions improve
A “recent worsening of trading conditions” has particularly knocked brand product sales, which are due to drop by around 9% against the previous year.
The company, which sells Morris & Co, Harlequin and Sanderson products, said brand sales of wallpapers and fabrics were up 5% year-on-year in December, but slid by 13% in January as shoppers tightened their belts.
It said the “downturn in consumer confidence” was “most significant in the UK”, its largest market.
Sanderson added that it expects to finish the year to January with high levels of stock than expected because of subdued customer demand, particularly for fabric.
However, these inventory levels are due to unwind in the coming months.
It added that brand product sales have also been impacted by “softness in the contract market at the end of the year, particularly in North America”, but stressed that its pipeline of potential orders is strong.
The group said on Monday it now expects to deliver pre-tax profits of between £4 million and £4.8 million for the year to January.
This compares with a £12.2 million profit the previous year, and is below previous estimates of around £8 million.
In a statement, Sanderson said: “The group is continuing to accelerate strategic changes and focusing on efficiency and cost savings to better position the business for the current trading environment and for future growth.
“The board remains confident in the group’s future performance once trading conditions improve.”
Shares were 12% lower in early trading on Monday.
