DFS Furniture PLC (LSE:DFS) shares opened sharply lower on Wednesday after the sofa retailer downgraded its revenue guidance.
The retailer, in a statement, said it now expects £995 million to £1 billion of revenue in the 53-week trading period ending 30 June 2024, down from £1 billion to £1.015 billion.
Profit before tax is meanwhile seen between £10 million and £12 million, from prior guidance of £20 million to £25 million.
DFS blamed the reduction on decreased customer orders and higher shipping costs related to ongoing disruptions in the Red Sea.
Some £12 million to £14 million worth of deliveries originally due in the current financial year are now expected to register after 30 June, it noted.
It, meanwhile, told investors that the company retains a strong market position with a company ‘record market share’ of over 38.5%.
DFS said it is set to end its financial year with net bank debt between £165 million and £170 million, within a total facility size of £250 million.
Looking ahead, the company said: “We have been encouraged by an improving trend in our group order intake, which is up over +9% in our fourth quarter to date, in line with our expectations.
“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.”
In London, shares were down 4.5% changing hands at 107.57p – having traded as low as 95p in early deals.