DFS profits to meet expectations despite ‘challenging’ trading

Furniture retailer DFS has said it expects full-year profits to be “broadly in line” with market expectations of £50m-£53.6m, despite a “challenging” trading period which saw half-year sales decline.

For the 26-week period to 29 December 2019, DFS revealed that gross sales decreased by 6% compared with the “comparatively strong” period in 2018.

The retailer said the performance reflects “the challenging market environment impacting footfall” and the performance in the strong prior year period that was driven by “latent demand and a higher opening order bank”.

It added that following a “subdued” August and September, order intake momentum has strengthened and its “key” winter sale trading period has started “satisfactorily”.

As a result, the retailer needs to achieve low single-digit revenue growth during the second half of the year DFS to meet market expectations.

In the update, the retailer said: “We expect that full-year profit before tax and brand amortisation will be broadly in line with market expectations, subject to achieving the low single digit revenue growth that we assume in our plan.

“Our expected revenue growth is supported by recent trading momentum and the benefit of opening a number of new Group showrooms during the first half.”

It added: “We are mindful of the broader political and economic uncertainty that still exists. However, we have made good progress on our strategic initiatives, driving showroom conversion and online growth. Furthermore, we have appropriate cost saving actions in place to help mitigate continued market weakness.

“It is worth reiterating that the group has historically capitalised on adverse trading conditions to build our market position and we continue to believe that our cash generation and long-term growth prospects will drive attractive returns for our shareholders.”