Popular British furniture retailer DFS has significantly cut its profit guidance due to ongoing shipping disruptions in the Red Sea and declining consumer demand.
In its interim results update in March, DFS had projected revenues between £1 billion and £1.015 billion, with profit before tax expected to range from £20 million to £25 million. Additionally, the company had noted a potential profit risk of up to £4 million if Red Sea shipping delays persisted throughout the year.
However, in a recent trading update for the 53-week period ending 30 June 2024, DFS revised its forecast, now expecting pre-tax profits to fall to approximately £10 million to £12 million. FY24 revenues are anticipated to be between £995 million and £1 billion.
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The company attributed the downward revision to a significant drop in delivered customer orders. This decline is partly due to £12 million to £14 million worth of delayed deliveries caused by disruptions in the Red Sea, where attacks on cargo ships from Houthi-dominated Yemen have affected shipping routes. These delayed deliveries are now expected to shift into FY25.
Additionally, DFS reported a roughly 10% year-on-year decline in consumer demand in the upholstery sector, starting from an already weak position. This decline has led to overall market demand levels reaching "record lows."
Source: www.retailgazette.co.uk