DFS Expects FY Profit Growth Despite ‘Relatively Subdued’ Market

DFS Furniture (LON: DFS) reported a trading update Friday highlighting a robust performance for the 26 weeks ending 29 December 2024. 

Despite a challenging market environment, the furniture company said it remains optimistic about achieving full-year profit growth.

DFS expects its half-year profit before tax and amortisation (PBT(A)) to reach approximately £16 million to £17 million, marking a year-on-year increase of £7 million to £8 million. 

The improvement is attributed to higher sales, operational cost savings, and better gross margins, which have effectively countered inflationary pressures.

Order intake saw a 10.1% year-on-year rise, driven by successful growth initiatives and substantial market share gains. 

DFS said Sofology, a key brand within the group, reported a 19.1% increase in order intake. 

Meanwhile, gross delivered sales are projected to grow by 1.4% year-on-year, with a higher closing order bank, aided by persistent shipping delays and strengthening order intake throughout the period.

Net bank debt decreased to £117 million, with leverage improving to 1.7x from 2.5x at the previous year-end. DFS added that the Winter Sale has commenced as expected, providing a positive start to the second half of the financial year.

Looking ahead, DFS anticipates full-year profit and cash flow growth, with profit delivery skewed towards the first half. 

However, the company remains cautious about H2 market demand, citing potential economic challenges post the UK budget, competitor dynamics, and rising operational costs.

“We remain focused on executing our plan, and are cautiously optimistic despite the increased inflationary pressures and less positive market outlook for 2025,” said Tim Stacey, the DFS CEO.