Sofa chain DFS has warned over profits after the General Election and an “uncertain macroeconomic environment” led to weak trading at its stores.

The retailer said that since March it has seen “significant declines in store footfall”, leading to a material reduction in customer orders.

As a result it now anticipates full-year operating profit to be lower than market expectations and in the range of £82 million to £87 million.

DFS said: “We believe these demand effects are market-wide, in line with industry indicators, and are linked to customer uncertainty regarding the General Election and the uncertain macroeconomic environment.

“As stated previously, the upholstery market does see short-term demand fluctuations from time to time, within an overall historical trend of long-term growth.”

Consumer confidence has been battered by a series of factors triggered by last year’s vote to quit the European Union.

The referendum result saw the pound collapse and inflation rocket, ramping up costs for British businesses and eroding consumer spending power.

However, DFS added: “We have maintained our investment in the business and we are confident that we will outperform the market over the longer term, driven by our scale, business model and proven growth levers.

“We believe our expectations for the next financial year are realistic based on consumer confidence remaining broadly in line with current levels, given its consequent impact on upholstery demand.”

Nick Ansell/PA Wire

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Royal Mail has said it narrowed the decline in letter deliveries thanks to a boost from general election political mailings, but confirmed revenues remained under pressure.

The group said total letter revenues fell by a better-than-expected 4% in the three months to June 25 after the snap election that month.

But with the benefit of the political mailings stripped out, letter volumes still fell 6% in the group’s first quarter.

Its UK parcels arm continued to help offset the ongoing decline in letters, with volumes up 5% and revenues up 3%.

This left overall underlying turnover from the letter and parcels arm 1% lower.

Its Europe-wide parcels business GLS continued to see solid growth, with underlying revenues up 6%, but with the benefit of recent acquisitions included, Royal Mail said turnover soared 18% in the quarter.

Royal Mail said the GLS performance helped drive a 1% rise in total group-wide underlying revenues.

Moya Greene, chief executive of Royal Mail, said the group had a “good start to our financial year”.

She said: “GLS continues to be a driving force for the group.

“Its ongoing, focused international expansion is increasing our geographic diversification, scale and reach.”

She added: “Our performance in letters was better than we expected, despite continued business uncertainty in the UK.”

The update comes after Royal Mail last week sought to avert the threat of strike action by announcing a new proposal for pension scheme changes.

The privatised group had planned to close its defined benefit pension scheme next year, which resulted in fury from Unite and the Communication Workers Union (CWU).

But on Friday, Royal Mail said that after “extensive talks” with unions, Unite is planning to hold a consultative ballot of its members on a new plan, which it insisted was a “significant improvement” on an earlier proposal.

The changes will see it offer scheme members a choice between a new defined benefit cash balance scheme and an improved defined contribution scheme.

Shares in Royal Mail lifted 3% after the update.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Royal Mail has emerged as the one clear winner of last month’s general election, with political mailings helping to slow the inexorable decline in UK letter volumes.

“UK parcels also looks like it’s turning a corner with steady volume growth, albeit at lower prices than previously.”

But he said the “wrangling” over the new pension scheme plans would remain a source of “uncertainty” for Royal Mail until all unions are on-side.

While Unite has said it believes the new pension proposal is the “best available deal”, the CWU union has rejected the plans, arguing it “does not meet our aspiration of a wage in retirement pension scheme”.

Joe Giddens/PA Wire

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In a world of fake news, post truths and alternative facts, and another UK election on the horizon, a new threat is emerging for the campaign trail.

As Prime Minister Theresa May, Labour leader Jeremy Corbyn and Liberal Democrat leader Tim Fallon all hit the campaign trail in the run-up to the snap general election on 8 June, there are concerns that their marketing campaigns could be overshadowed by fake news stories spread via social media.

In the run-up to last year’s US presidential race, entirely fictitious stories circulated through social media, such as the Hillary Clinton “Pizzagate” fiasco or false claims about a sex trafficking operation within the Democratic Party, or a “story” about Donald Trump being endorsed by Pope Francis.

There are various theories about what impact this had on the overall US election results. A study by Stanford and New York Universities said that it was unlikely to have swayed the election, but there are still huge concerns about how the rising tide of false information spread via social media could have an alarming effect, not just on our democratic processes, but also on how firms spread their messages to customers.

Although fake news is not seen as widespread threat just yet here in the UK, it is important that social media puts strong measures in place to make sure stories marketed from sources which are not credible undermine our democracy, and our businesses.

The problem is, once a fake news story goes viral, the damage has already been done – as the saying goes, a lie can travel half way around the world while the truth is putting on its shoes.

Facebook and Google have made efforts to stamp out fake news on their sites, while the UK’s Cultural, Media and Sport Committee has launched an inquiry into fake news. Wikipedia founder Jimmy Wales has set up a new site, Wikitribune, to fight the rise of fabricated stories. Let’s hope these initiatives will help stamp out the problem before it’s too late.

This article was published in our Business Reporter Online: Future of Marketing.

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