DFS investors hope for good news after profits were squeezed by shipping delays

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.

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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 £12m lower than the prior year, when it generated just over £30m.

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. (Photo by Nicholas.T.Ansell/PA Wire)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. (Photo by Nicholas.T.Ansell/PA Wire)
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. (Photo by Nicholas.T.Ansell/PA Wire)

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 £12m to £14m, and were expected to be pushed back into the 2025 financial year.

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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.

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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 £995m and £1bn, following a series of downgrades from an initial forecast of up to £1.1bn.

In a statement issued in June, DFS said: “Whilst the economic outlook remains hard to predict, we expect the widely predicted lower inflation and interest rate environment to have a positive impact on upholstery market demand levels with the declines experienced across the last three years starting to reverse and the market slowly recovering in our 2024-25 period.”

The DFS business was founded in 1969 by Graham Kirkham with a single store near Doncaster, trading as Northern Upholstery.

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Over the next four years, Northern Upholstery acquired additional manufacturing facilities around Doncaster.

In 1983, Northern Upholstery acquired the assets of DFS Furniture Limited and DFS continued to expand its store footprint and increase the scale of its manufacturing base.

DFS Furniture Company floated on the London Stock Exchange with a market capitalisation of around £270m in 1993. Over the next decade, it grew to become the largest retailer in the UK upholstery market.

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