DFS has slashed its profit guidance amid ongoing shipping disruptions in the Red Sea and slumping consumer demand.

In its interim results update in March, the furniture retailer was expecting revenues of £1bn – £1.015bn, with profit before tax to be in the range of £20-125m, and an additional profit risk of up to £4m if Red Sea shipping delays continued throughout the year.

But in an update on trading for the 53 week period to 30 June 2024, DFS said it now expects pre-tax profits to fall to around £10m-12m, with FY24 revenues anticipated to be £995m – £1bn.

Subscribe to Retail Gazette for free

 Sign up here to get the latest news straight into your inbox each morning 

The business attributed this to a fall in delivered customer orders, with £12m-14m worth of delayed deliveries from Red Sea disruption caused by attacks on cargo ships from Houthi dominated Yemen.

DFS warned that those deliveries are now “expected to move into FY25”.

The retailer added that consumer demand in the upholstery sector has declined about 10% in volume terms year-on- year from a weak starting point, bringing overall market demand levels to “record lows.”

It said: “Together these have limited the lower sales impact on our profitability.”

“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.”

Click here to sign up to Retail Gazette‘s free daily email newsletter