DFS has reported a £1.7m loss before tax in the year to 30 June, as the furniture retailer blamed shipping disruption in the Red Sea as well as “record low” market demand.

The group has also opted not to propose a final dividend with the Red Sea disruption also set to defer sales and profits to future periods.

DFS’ revenue from continuing operations was down by 9.3% to £987.1m in the year as a result, as the group also cited higher Bank of England rates which increased the cost of providing interest free credit.

The retailer had already issued two profit warnings this year as a result of higher costs caused by the shipping disruption in the Red Sea. Cargo ships have had to take long detours in the last year to avoid the Suez Canal trade route, which has been subject to attacks by the Houthis, a rebel group that started attacking the trade route last year in response to Israel’s bombing of Gaza.

However, the group’s CEO, Tim Stacey, said that he was “optimistic for the future” despite these challenges.

“We expect recent improvements in housing transaction data and strengthening consumer balance sheets to lead to increased upholstery market demand across the FY25 financial year,” Stacey added.

“In addition, thanks to the success we have had growing our gross margin and improving our operational efficiency we expect to deliver profits in line with market consensus, weighted to the second half.”

Stacey also suggested that the upholstery market has a “long road to recovery”, given the 20% decline on pre-pandemic levels in the market.

However, he remained upbeat and added: “We remain confident that the business is well positioned to capitalise on market recovery. Given our strong market leadership position, the operational leverage in the business, our well invested asset base and negative working capital cycle we expect to deliver strong returns for our shareholders.”

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