Household furniture retailer Fantastic Holdings Ltd
(ASX:FAN) has cut its earnings forecast for the year due to a tightening in household spending.
The downgrade follows similar warnings from other retailers with Woolworths just last week, lowering its sales expectations on a softening in consumer demand.
The company says sales in the third quarter of the financial year have been lower than expected, rising just 1.3% compared to the same period last year, but falling 4% on a like for like basis.
Fantastic says it is of the opinion that its recent sales performance has been impacted to a large degree by a tightening of discretionary household spending.
The company says it believes that this fall in purchase decisions is a direct consequence of continuing interest rate increases, and as a mortgage belt retailer, it is susceptible to early changes in consumer spending patterns.
Fantastic says at this point it expects net profit after tax for the year to June 2010 to now be in the range of $19 to $21 million.
The RBA is being tipped to announce another rate rise today at 2:30 pm Sydney time following its monetary policy meeting.
Fantastic posted a profit of $18.59 million for the year to June 30, 2009.
