DFS investors pinning hopes on upholstery recovery after profit warnings

The London-listed business will report its full-year financial results on Wednesday.

Anna Wise
Friday 20 September 2024 15:03 BST
Furniture retailer DFS saw its profits cut by almost half over the past year in the face of ‘very weak’ demand (Alamy/PA)
Furniture retailer DFS saw its profits cut by almost half over the past year in the face of ‘very weak’ demand (Alamy/PA)

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Investors will be hoping to hear some reassurance from furniture giant DFS after the chain warned its profits are being squeezed by shipping delays and record low levels of demand among sofa-buyers.

The London-listed business will report its full-year financial results on Wednesday.

It comes after the chain has lowered its profit expectations twice this year as economic conditions turned out to be tougher than it had expected.

In its last update in June, DFS said it was anticipating underlying pre-tax profits for the year to the end of June to be up to £12 million lower than the prior year, when it generated just over £30 million.

This decline was partly blamed on it being unable to deliver as many orders to customers thanks to disruption in the Red Sea.

Numerous retailers and suppliers have been affected by the rerouting of ships to avoid a series of attacks by Houthi rebels on cargo containers since late last year.

DFS said the delayed deliveries were worth about £12-14 million, and were expected to be pushed back into the 2025 financial year.

Investors will be keeping an eye on any updates from the firm over the shipping issues and its plans to mitigate higher freight costs.

Meanwhile, the furniture seller has also warned over softer demand for upholstery with buyers holding back on making more expensive purchases.

Overall demand across the market hit record lows over the past year, DFS said in July.

But shareholders could be hoping for signs of recovery in the market, with consumers benefiting from a sharp drop in inflation and interest rates starting to come down.

DFS, which also owns the Sofology brand, said it had been encouraged by orders ticking up in more recent months after it strengthened product ranges and prices.

The group is expecting revenues for the year to total between £995 million and £1 billion, following a series of downgrades from an initial forecast of up to £1.1 billion.

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