DFS profit rises but Brexit hits recent trading

Doncaster-based DFS Furniture said on Thursday its underlying pre-tax profit rose 31.1% to £50.2 million on a pro forma 52-week basis to June 30.

On the same basis, revenue rose 14.4% to £996.2 million.

However, DFS warned investors about “subdued” recent trading amid Brexit uncertainty and a slowdown in the housing market.

DFS Furniture CEO Tim Stacey said: “Our trading performance for the last financial year was good overall, as we continue to execute our new strategy to lead sofa retailing in the digital age.

“Like-for-like growth across all brands and all channels, especially online and in Sofology, has enabled us to grow our market share and as we celebrate DFS’s 50th anniversary, we believe that our Group is well positioned for the long term.

“Recent trading conditions have reflected the increasingly uncertain political and economic backdrop and we have seen reduced levels of footfall across our brands, which we attribute to lower levels of consumer confidence and housing transactions, the two key drivers of the upholstery market.

“Although we have had some success in driving conversion to mitigate this trend, we note that over the first twelve weeks of financial year order intake levels have been subdued.

“Our financial performance in the year ahead will inevitably be dependent on broader political and economic developments and at this stage it is difficult to predict what will happen specifically within the upholstery market. 

“However, we remain focused on those variables that we can control and on executing our strategy, which we believe puts us in a strong position in the market over the long-term.”

Analyst Caroline Gulliver at Jefferies said it was likely that the first half of 2019-20 will be weak for DFS.

She trimmed profit expectations for the new financial year by around 5% on the back of the slower recent sales at DFS, but said the impact will be short term.

“We expect DFS to emerge stronger than ever,” she added.