DFS Reports 9.3% Revenue Drop Amid Shipping Delays and High Rates

DFS, a furniture retailer, reported a significant revenue drop of 9.3% to £987.1 million for the year ending June 30, primarily due to low market demand and shipping delays. The company faced disruptions in its supply chain, particularly in the Red Sea, where shipping routes were altered due to attacks by Houthi rebels. This situation resulted in £12 million of sales being deferred to the next financial year. Additionally, the surge in living costs and higher mortgage rates led consumers to reduce spending on large purchases. The retailer's financial performance deteriorated, resulting in a pre-tax loss of £1.7 million, a stark contrast to the £29.7 million profit from the previous year. Despite achieving £27.5 million in cost efficiencies, the overall demand for upholstery products remained weak, with a noted 20% decline compared to pre-pandemic levels. The company acknowledged that the decline in orders exceeded their initial expectations. However, DFS reported that trading conditions have improved since July, with order growth observed over the past 12 weeks. The management expressed cautious optimism for a gradual market recovery throughout the year, indicating that the company is well-positioned to benefit from any resurgence in consumer demand. Industry experts noted that while DFS has faced an exceptionally challenging year, there is potential for recovery as consumer confidence improves, driven by positive trends in the housing market and increases in disposable income. The company remains committed to delivering quality service and is focused on achieving further cost savings by 2026.