Caffyns expects the success of its performance for 2007 to come down to the final two months of the financial year after a slowdown in retail demand.

The group said the performance in the second half of the year was "considerably weaker than expected," with December and January particularly poor months.

In its latest trading statement, Caffyns said: “The economic factors influencing our sales include a slow down in the housing market and an adverse environment for consumer credit. Retail demand, which is the key driver of our business, has therefore been weakened and December was a particularly disappointing month. This downward trend has continued in January.

“We anticipate that margins will remain under pressure for some time to come and we now expect that our trading performance will be considerably weaker in the second half of the year than in the first half.”

The group is currently examining a number of initiatives to improve its performance over the next two months.

Caffyns reported its turnover for the first half of 2007 in November which was £94.991 million, up from £85.484 million year-on-year, but profit before tax at 0.8% compared with 0.7%.