Furniture retailer MFI has added to the gloom surrounding the retail sector by reporting a sharp drop in UK orders.
UK spending on furniture has fallen
MFI said that since the start of the second half of its financial year its UK stores had seen orders drop by 15%.
However, the poor performance at its UK retail side was offset by rising sales at its Howden Joinery business and its French retail chain Hygena Cuisines.
On Tuesday, figures from the British Retail Consortium showed retail sales remained under pressure in August.
The BRC's survey said that UK like-for-like sales fell 1% in August, and noted that poor furniture sales were one of the main reasons.
MFI said that its UK retail business saw a 6% fall in net orders in the period from 26 December to 7 September, with same-store orders down 7%.
It added that since the start of the second half of the year it had seen a "deteriorating market place" and that orders were down 15% on a year ago.
However, MFI's group performance was lifted by its Howden Joinery business, which saw net orders rise 10%, or 8% on a same-store basis.
Hygena Cuisines, its French retail business, enjoyed an 11% rise in net orders, with same-store sales up 7%.
Overall, the MFI group reported a 1% rise in net orders, with same-store orders down 1%.
Financial analysts said they now expected MFI's full-year profits to be much lower than previously thought.
"It looks as though the major tail-off in housing transactions in early 2005 is rippling through to the kitchen market," said Mark Charnock, an analyst with Investec Securities.
MFI shares dropped more than 9% in the first few minutes of trade but then recovered slightly to close down 4.75 pence, or 3.9%, at 114.5p.