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Furniture chain ScS Upholstery has scaled back expansion plans and will not pay a dividend after poor Christmas trading.

The Sunderland-based group had planned to open five new stores before July, but after posting a 16% drop in like-for-like sales in the three weeks since Boxing Day it said just one would now open.

A refurbishment programme for its 95 UK stores has been postponed. ScS has blamed the situation on the credit squeeze and pressures on consumer spending.

Management warned that 'no relief' in the situation was expected before the firm's financial year-end in July.

The difficult conditions are being felt across the sector. Its rival, Land of Leather, issued a profits warning two week ago, telling investors that sales in the run-up to Christmas fell by 25.5%.

Shares in ScS fell nearly 10% to 43p in early trading on Monday.