Shares in ScS Upholstery dropped 5.36 per cent to a seven-year low of 106½p today after the group gave warning that trading for the first six months of its financial year would fall.

Like-for-like sales for the first four months are already down 16 per cent. Total revenue dropped 9 per cent.

ScS blamed "tough comparables" with last year but also said that "previous interest rate increases continue to affect consumers".

It added: "When combined with the high-profile collapse in the sub-prime debt markets and the resultant credit squeeze, we believe that consumer confidence has been severely hit with regard to 'big ticket' purchases."

Other retailers have also been hit by consumers' belt-tightening, curtailing purchases for the home in the face of higher borrowing costs and a weakening housing market.

ScS said it is now reviewing its cost base "to a level more appropriate to current trading", but did not disclose if this will include job cuts.

While admitting its short-term caution, ScS said it was too early to predict the outcome for the full year since the group has a number of "key trading periods" ahead. These include Boxing Day, the January sales, Easter and the May bank holidays.

ScS said it will step up its advertising by "reverting to a more aggressive campaign". Its contract with Martin Kemp, the former Spandau Ballet bassist and Eastenders actor, ended in November but the company declined to say if it has secured a new face for its sofas.

DSG International, owner of the Currys chain, said last week that trading in white goods, such as fridges, was "more subdued", while its rival Comet reported a fall in sales of fridges, freezers and washing machines.

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