The impact of the housing market slowdown on sofa sales has been laid bare, including a suggestion that the market has not been as badly hit as a many had suggested.
DFS says that while orders across the group – DFS and Sofology – rose by 2.3% in the first half of its financial year, this had reversed to -4.4% in the six months to 28 June.
The group ended the year with orders down 0.1%, which says ‘was broadly in line with the market.’
It says that full-yar profits will be around £45m – £15m higher than 2024/2025, after it reached its upgraded profit forecast. ‘Profit performance was underpinned by 2.7% revenue growth, gross margin expansion and continued cost discipline,’ it says.
It has also slashed net bank debt from £107m to £69m, seeing leverage fall from x1.4 to x0.9.
‘Through the year we have made important strategic progress across the business while also delivering a strong financial performance. We have navigated the complex and changing market environment focusing on our customer propositions combined with disciplined cost management ensuring that we delivered our upgraded profit expectations despite the market softening in the second half,’ says Tim Stacey, DFS group chief executive.
‘Importantly, a strong profit performance and capital rigour has enabled us to further reduce our net bank debt and improve our leverage position, providing the group with a solid financial foundation to navigate any further market volatility.
‘We remain firmly committed to our medium-term ambitions of £1.4bn revenue and an 8% PBT margin, and I am confident that our strategy will drive strong shareholder returns as market conditions improve.’
