Essex Furniture shares slump after profits warning

ESSEX FURNITURE delivered further evidence of weakening demand for higher ticket consumer goods yesterday when it warned of heavy first- half losses and the closure of a factory in Southend which employs 60 workers.

The profits warning knocked 28 per cent off the value of Essex Furniture shares, which have been in freefall for a year. They closed down 9.5p at 20.5p, valuing the company at less than pounds 3m.

Though sales in the six months to June have been ahead of the same period last year, this has been offset by lower margins and higher advertising and other costs totalling pounds 2.8m more than last year. The company expects losses of up to pounds 3.7m in the first half and a loss in the full year.

The company is implementing a cost-cutting plan which will include the closure of the Southend factory. Production will be moved to itsDudley plant.

Ted Fisher, finance director, is retiring. He will be replaced by Stephen Smith who will act as interim finance director.

The news is the latest in a string of downbeat announcements from retailers in the furnishings sector. DFS Furniture, MFI, Carpetright and Allied Carpets have all issued profits warnings or reported slower sales since the spring.

It is understood that Essex Furniture, which is to change its name to Furniture Workshop, put itself up for sale a year ago but failed to find a buyer. In May, the company reported a slight dip in profits from pounds 920,000 to pounds 913,000 on sales of pounds 34.1m. Shares in MFI fell a penny yesterday to a new low of 39.5p.