Shares of Doncaster-based DFS Furniture plc fell as much as 7% after its first-half results revealed a decline in sales and profit and the firm cut its full-year revenue and profit guidance.

“After a solid start to January, market demand has weakened significantly over the last two months, with market order volumes down c16% year on year across January and February (H1 -10%) …” said DFS.

“The group has not been immune to this and today we provide updated guidance for the year ending 30 June 2024 (53 weeks) …

“Revenues expected to be in the range of £1,000m-£1,015m and PBT(A) to be in the range of £20-25m, excluding risk of Red Sea delays which we continue to monitor closely …

“This represents a £60-£65m reduction in revenue guidance, partially mitigated to a £10m reduction in PBT(A) guidance, supported by strong progress on costs and gross margins …

“The guidance assumes H2 market volumes broadly consistent with H1 year on year, in a range of -8% to -10%, supported by weaker Q4 comparatives and a level of pent up demand following the weak January and February.

“We remain cautious about consumer confidence starting to improve and benefit demand until FY25 …

“H2 group year on year order intake of -2% to -4% (H1 -1.1%) is based on our assumptions for H2 market volumes and our spring trading plans …

“If the Red Sea issues continue through to our year end, potential delivery delays could result in up to £4m of profit being deferred into our following financial year.”

For the 26-week period ended December 24, 2023, DFS said gross sales fell 5.6% to £666.2 million, revenue fell 7.2% to £505.1 million and reported profit before tax fell to £900,000 from £6.8 million. Interim dividend per share fell to 1.1p from 1.5p.

DFS CEO Tim Stacey said: “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 FY24 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 8% PBT target when the market recovers.”