DFS shares plunge on profits warning

The sofa chain has seen a shift in customer demand over its fourth quarter and a fall in orders.

Sofa chain DFS Furniture has warned over annual sales and profits after revealing a drop in orders as consumers rein in their spending amid the cost-of-living crunch (Denis Kennedy/DFS Furniture/PA)
Sofa chain DFS Furniture has warned over annual sales and profits after revealing a drop in orders as consumers rein in their spending amid the cost-of-living crunch (Denis Kennedy/DFS Furniture/PA)

Sofa chain DFS Furniture has seen shares slump after warning over profits following a drop in orders as consumers rein in their spending amid the cost-of-living crunch.

The retailer said it has seen a shift in customer demand over its fourth quarter and a fall in orders, which will hit profits, sending shares tumbling by 17%.

The firm said the drop was similar to the recent 2.1% decline in consumer spending reported by Barclaycard for April compared with pre-pandemic levels.

It marks the latest sign of a pull-back in spending on big items as the cost-of-living crisis weighs on UK households.

The threat of a recession is looming large as soaring inflation is expected to lead to a sharp drop in consumer and business spending over the year ahead.

DFS said it is seeing lower levels of production and deliveries due to ongoing supply chain disruption (Nick Ansell/PA)

DFS added that it is seeing lower levels of production and deliveries than it had expected due also to ongoing supply chain disruption.

It slashed its outlook for underlying pre-tax profits to between £57 million and £62 million for the year to June 26, against previous City expectations of around £77 million.

Revenues are now set to come in at about £1.15 billion to £1.16 billion, down from the £1.19 billion pencilled in by the City.

The group said it has boosted its order book – up by around £30 million or 2.5% of annual revenues compared with before the pandemic – which will “provide some resilience going into our 2023 financial year”.

However it warned: “It is difficult to forecast consumer behaviour over the next 12 months, but should the trends observed in April and May continue across 2022-23, this would broadly balance the volume benefit from the elevated opening order bank.”

It is hoping to drive cost savings to help offset some of the trading pressures.

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