DFS annual profits scorched by heatwave

Sofa chain DFS has seen full year profits cut in half after the summer heatwave hit sales in the fourth quarter.

Pre-tax profit for the year to July 28 plummeted 48.5% to £25.8 million, while underlying earnings crashed 7.6% to £76.1 million.

Revenue fell 2% to £747.7 million when stripping out the benefit of acquisitions.

DFS said: “Continued economic uncertainty for consumers, compounded by some exceptional hot weather over key trading periods in the final quarter, resulted in sales and profits for the full year falling below our expectations.”

The retailer saw lower-than-expected orders in its fourth quarter as the hot weather put off customers over key trading weekends.

As well as warm weather woes, shipments of made-to-order products from the Far East were hit by delays at Felixstowe port, which has been thrown into turmoil after the troubled launch of a new terminal operating system.

This has been delaying deliveries to customers, which is when DFS records the sale on its books.

Chief executive Ian Filby struck a decidedly downbeat tone on Brexit and consumer confidence.

“Financial results for the year reflected the exceptional downturn in market demand we saw in the fourth quarter.

“We are pleased to note that the market has recovered since the start of the new financial year, with the group seeing like-for-like order growth across all brands over the first nine weeks.

“We believe, however, we are benefiting from deferred purchases in the prior financial year and overall we expect the market to remain subdued into 2019, constrained by political risk and weak consumer sentiment.”

In better news, group revenue including acquisitions, such as Sofology, rose 14.1% to £870.5 million, while online sales jumped 15.1%.