Sofa chain DFS Furniture suffers from weak consumer demand and delivery delays

Sofa chain DFS Furniture has revealed that its financial performance has been affected by weak consumer demand and delivery delays from Red Sea shipping disruption.

The group said shipping troubles in the Red Sea has delayed £12m to £14m of deliveries, which will now be pushed into the next financial year.

Higher shipping costs due to the disruption are also impacting the firm, as ships are having to take a lengthy detour to avoid the vital Suez Canal trade route amid attacks by Houthi rebels on cargo containers.

Hide Ad
Hide Ad

This is adding to the hit from weak demand for so-called big ticket items such as upholstery from more cautious shoppers, which has seen the group use incentives to boost orders.

DFS Furniture has been affected by weak consumer demand and delivery delays from Red Sea shipping disruption. (Photo by Nicholas.T.Ansell/PA Wire)DFS Furniture has been affected by weak consumer demand and delivery delays from Red Sea shipping disruption. (Photo by Nicholas.T.Ansell/PA Wire)
DFS Furniture has been affected by weak consumer demand and delivery delays from Red Sea shipping disruption. (Photo by Nicholas.T.Ansell/PA Wire)

It said that sales are now expected at around £995m to £1bn in the year to June 30, while the retailer now forecasts annual underlying pre-tax profits to fall by between £10m to £12m.

It previously reported underlying pre-tax profits of £30.6m in 2022-23.

DFS had already slashed guidance in March, saying it expected annual revenues to fall to between £1bn and £1.02bn and underlying pre-tax profits to drop to £20m to £25m.

Hide Ad
Hide Ad

DFS said: “Since that update, consumer demand in the upholstery sector has remained challenging and Red Sea routing issues have persisted, resulting in delays to customer deliveries and higher freight costs.”

Consumer demand in the upholstery sector has hit record lows, dropping 10 per cent by volume, according to DFS.

But the group said it had seen a pick up in trade over its final quarter, with orders up 9 per cent, although this is against weak comparatives from a year ago.

The firm has also looked to drive sales by strengthening the product ranging and pricing in its Sofology brand, while also reintroducing four-year interest free credit deals “at select times to maximise revenue and profit in this difficult trading environment”.

Hide Ad
Hide Ad

It added: “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 FY25 period.

"We are well placed to capitalise on any market recovery given our market leadership position, the operational leverage in the business and the progress we are making on our cost base.”

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

Northern Upholstery acquired additional manufacturing facilities around Doncaster, and in 1983, it bought the assets of DFS Furniture Limited as it expanded its store footprint. By 2014, DFS had opened its 100th store in the UK and entered Continental Europe. It listed on the London Stock Exchange the following year and grew further by acquiring Sofology, the third largest retailer of sofas in the UK, in 2018.

Comment Guidelines

National World encourages reader discussion on our stories. User feedback, insights and back-and-forth exchanges add a rich layer of context to reporting. Please review our Community Guidelines before commenting.