DFS has seen profits drop by more than 40% in the past quarter after a double-digit fall in sales.
The upholstery chain saw sales drop by 14.3% to £128.2m in the quarter to 29 October, with profits down 42.8% to £8.7m.
'As we anticipated, we have seen a continuation of the weak demand that began in the second half of our last financial year and was particularly evident during August. We also entered the current financial year with a smaller order bank than in 2010, principally as the result of our own work to reduce delivery lead times for our customers,' says Ian Filby, DFS chief executive.
'Although we expect no early improvement in the trading environment, we are confident that DFS has the right strategy, proposition and team to manage the business through these tough conditions.'
Having opened seven branches and expanded its manufacturing capacity in the quarter, Filby confirmed it planned another seven stores in the current financial year.
'The current investment in new stores and manufacturing will continue to drive our market share and we will also focus on margin, costs and cash generation to deliver a good financial performance over the year as a whole.'
Filby has previously said customers were looking to trade up but growth had been restricted due to issues with consumer credit availability.