Warning at World of Leather

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The Independent Online
The fragile housing market and weak trading on the high street caused two more companies to issue profits warnings yesterday, the latest in a flurry of retail and housing groups to warn of economic slowdown.

Shares in World of Leather, the furniture retailer, slumped 13p to 43p after the company said sales of its leather sofas had fallen well below expectations in the summer sale season. Shares in Magnolia, a picture frames and reproductions company, fell 8p to 44p when it said that poor trading conditions and continuing rationalisation costs would result in a pre-tax loss for the year. It is the company's second profits warning this year.

The company said: "The housing market, which has a significant influence on demand for our products, remains depressed and it is unlikely there will be any improvement for the remainder of 1995."

World of Leather made profits of pounds 534,000 in 1994 against losses of pounds 121,000 in the previous year. But the company yesterday said that this year's results would be "well below" those forecast by the company's broker.

World of Leather only recently returned to the dividend list after a six-year gap. Last August it announced a rights issue to fund an expansion programme. The company is in the process of adding another dozen stores to take the total to more than 40. The shares have halved in value in the last year since hitting 93p last August. The founding Bernadout brothers still own a majority stake in the company.

Magnolia issued a profits warning in February when it parted company with both its chief executive and finance director and said that it would fall into loss in the second half. The company is 34 per cent-owned by the Wallrock family.