DFS has issued a second profit warning of the year as a result of higher costs caused by the shipping disruption in the Red Sea.

The furniture retailer said consumer demand in the upholstery sector has been “challenging” and that Red Sea routing issues have resulted in higher freight costs as well as delays to customer deliveries.

Cargo ships have had to take long detours to avoid the Suez Canal trade route, which has been subject to attacks by the Houthis, a rebel group that considers Israel an enemy and started attacking the trade route last year in response to the Israeli bombing of Gaza.

Following this disruption, DFS said it now expects its profit before tax to fall “in the range of £10m-12m” for the year to 30 June, down on the £20m-25m guidance it was predicting in March. The retailer had already revised down its initial profit forecast of £30m-£35m for the year in its last trading update.

The furniture retailer noted that it has managed to limit the lower sales impact on its profitability by reducing operating costs, which it expects to be down by approximately £25m year-on-year.

A statement from DFS said: “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.”

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