DFS hails improved performance, warns over rising costs

(Sharecast News) - DFS Furniture hailed an improved performance on Friday but warned over rising costs due to changes announced in the recent Budget. In an update for the 26 weeks to 29 December 2024, the Sofology owner said first-half pre-tax profit was set to be around £16m to £17m, up £7m to £8m on the previous year.

Group order intake grew 10.1% year-on-year notwithstanding a weak market backdrop, it said, supported by successful implementation of growth initiatives and higher-than-expected market share gains for both brands.

The retailer said the important Winter Sale period has started in line with its expectations.

DFS said it still expects growth in full-year profits and cash flow, with FY25 pre-tax profit expected to be in-line with current market consensus of £22.7m.

However, profit is now expected to be weighted to the first half. DFS highlighted a cautious view on market demand in H2, based on the performance of the UK economy since the Budget.

It also pointed to a jump in operational costs due to rises in national insurance contributions and the national living wage, and higher-than-expected interest rates.

Chief executive Tim Stacey said: "While the market remains relatively subdued, we are continuing to deliver on our self-help initiatives having strengthened our position as the clear market leader, improved our gross margin and reduced our operating costs, all of which have helped us to deliver year on year profit growth.

"We remain focused on executing our plan, and are cautiously optimistic despite the increased inflationary pressures and less positive market outlook for 2025. Looking forward, we are confident that the group is well positioned to drive attractive returns for shareholders as the market recovers and we remain focused on delivering our 8% profit before tax medium-term target."

At 0925 GMT, the shares were down 1.5% at 136.00p.