Following the news that DFS has announced a profit warning;

Matt Walton, Senior Data Analyst at GlobalData, offers his view:

“The disruption in deliveries through the Red Sea has been the main driver behind this profit warning but DFS has also experienced a significant cooling in demand as shoppers cut back sharply on non-essential purchases. Volumes declined 16% in January and February 2024 versus last year. Furniture has been an easy area to cut back on as shoppers’ disposable income has come under pressure due to its less essential nature and the weaker housing market, removing one of the sector’s main drivers. This crunch on consumer spending is reiterated by figures from GlobalData’s Consumer Sentiment Tracker for May 2024 showing that 42.1% of shoppers feel that now is a bad time to make big ticket purchases.

“The upholstery market leader is set to emerge from this financial year in better shape, however. Orders were up by 9% in its Q4 to date, as price investment in Sofology and returning to four years interest-free credit resonated with shoppers, albeit on softer comparatives. GlobalData’s Consumer Sentiment tracker is also showing an improvement in consumer confidence, which will support the big-ticket sectors, along with more of a return to real wage growth.”