Doncaster-based DFS Furniture plc reported a sharp drop in sales and profit for the year, but said it expected a gradual market recovery to put earnings back on track. 

The company posted revenue of £987.1 million for the year, down 9% from the year before, while underlying profit before tax and brand amortisation was £10.5m, down from £30.6 million a year ago. 

It said the profit decline was due to record low market demand and higher interest costs, partly offset by gross margin improvements and operating cost savings.

Tim Stacey, Group Chief Executive Officer said: “Despite the challenges that the business has seen, we are optimistic for the future and see signs that market growth could soon return. 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.”

“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. It is clear that the upholstery market has a long road to recovery given the 20% decline on pre-pandemic levels that we have seen.”

Looking forward, the company said trading for the current year was in line with the board’s expectations and it expected a “gradual market recovery” over the course of the year, aided by the recent housing market and real household disposable income growth. 

It said it expected to underlying profit before tax and brand amortisation to increase in line with market consensus of £23.2 million.