More than half of Land of Leather’s market value was wiped out today as the furniture giant gave warning that its profits this year would fall “significantly” below expectations.

The warning makes the group the second big casualty on the high-street this Christmas after DSG International.

Shares plunged 50 per cent, or 56.5p to 57.25p while SCS Upholstery, its quoted rival, tumbled 29 per cent.

Land of Leather, one of Britain’s biggest sofa chains, blamed the fallout from the credit crunch and said that sales in the first nine days of its Christmas sale had failed to come anywhere near internal forecasts.

Before Christmas Land of Leather was promising £100 million of discounts, its biggest ever post-Christmas price cut, with markdowns of up to 60 per cent.

However today's warning revealed that like-for-like sales at the chain between the end of October and January 3 were down 25.5 per cent.

In the year to July 29, 2007, the group made a profit before tax and exceptional items of £18.5 million. It floated in 2005.

The warning is the latest sign of the huge gap appearing between the winners and losers on the high street in the past month.

John Lewis today said the first day of its clearance sale had been the best on record, generating £20 million at the tills, up nearly 9 per cent on a year ago. Electricals and furniture are two of its biggest areas.

In a statment Land of Leather said: “We are taking all the necessary action to reduce our operating costs in line with the lower sales levels and we are currently planning to open two new stores during the remainder of the financial year.

“Despite lower profits this year, the board still expects to end the current financial year [to August 2008] with substantial net cash.”

Ian McDougall, analyst at Blue Oar Securities, said: "This fits entirely with the picture. In times like this furniture is at the absolute bottom of everyone's list."

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