DFS Furniture Expects Improvement in Profitability in First-Half

2 min read | January 17, 2025 02:14 AM EST | By Team Kalkine Media

DFS Furniture Expects Improvement in Profitability in First-Half — Image source: shutterstock

First-Half Performance

The group expects profit before tax (PBT) for the first half to be approximately £16-17 million, representing a year-on-year increase of £7-8 million. This improvement is attributed to higher sales, cost savings, and gross margin enhancements, which have effectively countered inflationary pressures.

Group order intake rose by 10.1% compared to the previous year, driven by successful growth initiatives and increased market share for both DFS and Sofology. Sofology, in particular, demonstrated remarkable progress with a 19.1% year-on-year increase in order intake.

Gross delivered sales for the period are expected to grow by 1.4%, supported by a higher order bank due to ongoing Red Sea shipping delays and strengthened order intake during the period.

Debt and Leverage Improvements

DFS has made strides in reducing its net bank debt, which stood at £117 million at the end of the reporting period. This reduction has improved the company’s leverage ratio to 1.7x, a significant improvement from 2.5x at the end of the previous financial year.

Winter Sale and Outlook

The critical Winter Sale period has begun as anticipated, aligning with the group’s expectations. Looking ahead, DFS forecasts full-year profit and cash flow growth, with FY25 PBT expected to align with current market consensus.

However, profit delivery is expected to be weighted toward the first half of the financial year due to several factors:

A cautious outlook on market demand in the second half, influenced by the UK’s post-budget economic performance.
Anticipated reversal of some gains from competitor disruptions that benefited the first half.
Increased operational costs in the second half due to higher national insurance contributions, the national living wage, and elevated interest rates, alongside planned investments for future growth.

DFS will announce its interim results for the period ending 29 December 2024 on 13 March 2025.

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