Wasteland of Leather, more like. The home-furnishings company has suffered an 87% drop in annual profits, saying its pre-tax profit for the year to 3 August was £2.3m, down from £18.5m a year ago. Total sales fell 3% to £232m, and next year isn't going to be much better. Operating costs will be slashed in an attempt to save about £17m. So far, Land of Leather's board has agreed to forgo part of their salaries, cutting group wage costs by a quarter. The firm has also shed 200 jobs in its 109 branches, and store openings and refurbishments have been put on hold. To add to its woes, customer Barry Green of Plymouth is suing the company and its Chinese manufacturer over claims that a £545 sofa bought from Land of Leather gave him a permanent heart condition caused by sachets of anti-mould fungicide under the cushions. Not all publicity is good publicity.
Said chairman Roger Matthews: 'The past year has been one of the most difficult for the retail furniture industry in many years. Trading conditions were severely affected by the impact of the credit crunch on housing transaction levels, consumer confidence and spending on bigger-ticket discretionary items.' Promotional activity and exceptional items were blamed for the profit fall.