DFS has warned that the ongoing chaos in the Rea Sea could continue to impact its balance sheet as it revealed a reduced financial performance.
The furniture giant has said that as a result of “weaker market demand” it has lowered its profit guidance for its full financial year to between £20m and £25m. During its prior 12 months, DFS’s pre-tax profits totalled almost £30m.
DFS added that the updated guidance excludes the potential risk of further delays in the Red Sea, which it will “continue to monitor closely.”
The business said that issues in the Red Sea continue through to the end of its current financial year, potential delivery delays could result in up to £3m of profit being deferred into the following 12 months.
The company also reduced its revenue expectations by between £60m and £65m. During its prior financial year, the firm’s revenue totalled £1.1bn.
In a statement issued to the London Stock Exchange, DFS said it “remain[s] confident in both our long-term growth strategy and the capability to deliver on our objectives”
For the six months to December 24, 2023, DFS posted a revenue of £505.1m, down from £544.5m, and pre-tax profits of £900,000, down from £6.8m.
Chief executive Tim Stacey said: “I want to thank our colleagues for their dedication toward providing a first class service to our customers.
“Whilst the current macroeconomic situation has presented many challenges, we are pleased to have extended our market leadership while reporting a resilient profit performance through the first half.
As a result of weaker market demand we have lowered our 2024 profit guidance to £20-£25m, excluding the potential risk of Red Sea delays which we continue to monitor closely.
“This reflects revenue guidance reducing by £60-65m, partially mitigated by good progress on our cost to operate programme.
“We remain confident in both our long-term growth strategy and the capability to deliver on our objectives.
“We remain well positioned to improve our profit margins without market recovery and remain confident in delivering our eight per cent profit before tax target when the market recovers.”