DFS profits rise, but Brexit uncertainty slows recent trading
Sofa chain DFS Furniture has seen annual profits surge by nearly a third, but cautioned over “subdued” recent trading amid Brexit uncertainty and a slowdown in the housing market.
The group posted pre-tax profits of £50.2 million on a pro forma 52-week basis to June 30 against £38.3 million a year earlier as its DFS chain saw a welcome return to sales growth.
Like-for-like group sales rose 5.7% and it said all its brands, including recently-bought Sofology, delivered growth.
But the firm said sales growth slowed over the second half as order intake eased back, a trend which has continued into the new financial year.
Tim Stacey, group chief executive, said: “Recent trading conditions have reflected the increasingly uncertain political and economic backdrop, and we have seen reduced levels of footfall across all 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 12 weeks of the financial year order intake levels have been subdued.”
He added that the outlook for the new financial year is dependent on the Brexit outcome and wider economy.
“At this stage it is difficult to predict what will happen specifically within the upholstery market,” he said.
Results showed that on a statutory basis, profits for the 48 weeks fell 13.2% to £22.4 million against £25.8 million in the previous 52 weeks.
The firm said a 16.2% jump in online sales helped DFS grow like-for-like sales, while Sofology same-store revenues leapt 10.7% higher.
Dwell and Sofa Workshop also delivered comparable sales growth.
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.