DFS ‘confident’ despite halved profits

DFS has seen a fall in both its sales and pre-tax profits for the six months to 27 January amid “challenging market conditions”.

The sofa and living room retailer said revenue before acquisitions was down by 3.5% to £366.5m and profits had decreased by 58.1% to £7m, where it was £16.7m in 2017.

The firm attributed the profit contraction to a “small seasonal-related operating loss by Sofology over the two-month period of ownership and some of the interest costs of acquisition”.

When the group’s recent acquisition of the Sofology chain was taken into account, revenues were actually 4.3% higher. The company also added that more recent performance had improved.

Underlying EBITDA before acquisitions was £30m (2017: £32.4m), in line with the firms expectations, with the 7.4% decrease reflecting lower revenues.

Along with Sofology DFS owns the Sofa Workshop and Dwell brands as well as brand partnerships with French Connection and House Beautiful.

DFS chief executive Ian Filby said: “We have seen a strengthening trading performance across the first half of the financial year and through February into March. We therefore remain confident that, despite the current challenging market conditions, the group will deliver modest growth in EBITDA and generate strong cashflow across this financial year, in line with our expectations.

“The overall increase in group revenues, which rose to £396.1m, up from 379.9m, reflected increasing scale and relative market leadership following the recent acquisition of Sofology”.