The retailer reported that its total sales orders plunged 24.7 per cent for the 13 weeks to April 27 and that like-for-like sales orders plummeted 32.1 per cent. The third-quarter results showed a 32 per cent decline over a two-year period.
Broker KBC Peel Hunt said there will be no respite. “We expect there to be no let-up in the furniture sector this year and Land of Leather, with others such as ScS, will continue to deliver negative like-for-likes,” said analyst Robert Brent.
Land of Leather has cut its operating costs by about£11 million on an annual basis and the retailer said it will remain focused on reducing costs.
Brent said: “Realism has to come into play for furniture retailers and they must look at all avenues to cut costs.”
He feared that there is greater cause for concern over Land of Leather than some other struggling furniture retailers because it has opened a third of its estate – about 37 shops – over the past two years.
“Land of Leather must have been offered some good premiums to take sites over the past two years and that cash fuelled its expansion plans,” he said.
“As those incentives come to an end, Land of Leather will be hit with a huge rent bill and that throws a question mark over the strength of its balance sheet.”
Investec analyst David Jeary noted that Land of Leather has managed to strike a deal on some concession space formerly occupied by Sleep Depot, which went into administration last month.
Homestyle has taken 28 of the 71 concessions for its beds business, and Land of Leather estimates the deal will deliver£2 million of annual income.
However, because of continued tough trade, Investec has reduced its pre-tax profit forecast for the year from£4.5 million to£3 million.
No comments yet