Sofa giants DFS has announced a huge annual profit decrease in its full year results for 2017 today, amid a "challenging" year.

 Pre-tax profits at DFS, which accounts for a quarter of the £3bn upholstered furniture market, fell 22.3 per cent to £50.1m in the 12 months to July 29. Earnings before interest, tax, depreciation and amortisation were down 12.7 per cent to £82.4m.

DFS Chief Executive Officer, Ian Filby said: “It was a tough three or four months but the market tends to balance itself out over a longer period. That appears to be happening this year.”

The shares, which fell sharply in June after a profits warning, were down 6%, or 14.25p, to 210.75p today.

DFS are expected to add another three stores over the coming year, as well as the acquisition of 37 Sofology shops once regulatory clearance has been given. It is also rolling out a licensing partnership with retail brand Joules. In regards to this Mr Filby said:

“We have continued to make good strategic progress across all our key areas of growth, while our financial performance reflects the current challenges of the UK furniture market. In particular we were delighted to announce the acquisition of Sofology and the exclusive licensing partnership with the British lifestyle brand Joules."

Earnings before interest, tax, depreciation and amortisation (EBITA) was down by 12.7%.

The slowdown in trading in the second half compared with 7% gross sales growth at the half-year stage. Sales across the full financial year increased by 1.1% to £990.8 million from £980.4 million.

The full-year increase was driven by a much better performance at the Dwell and Sofa Workshop brands, which offset a 0.6% decrease in DFS revenues.

Dwell opened 15 stores and a new national warehouse in the year, doubling the size of its retail network.

The company said it would continue to invest heavily in marketing spend. It saw some media cost inflation early in the financial year, but this has since reversed and the company expects the deflationary trend to persist into 2018.

Many are looking at the weaker pound as a reason for the loss in profits, with slower consumer demand and tighter household income since the EU referendum last year.

Mr Filby continued: "Historically DFS has been able to build its market leading position and generate strong cashflow for shareholders in all environments by leveraging its fundamental strengths. Our recent strategic investments and operating efficiency programme support our confidence in our ability to deliver modest profit growth and cash returns in the current financial year and we continue to have excellent prospects for the long term.”