DFS sitting pretty with £25m acquisition

Doncaster-based sofa retailer DFS is getting comfortable with its latest acquisition, Sofology – a company it was entwined in a legal battle with just two years ago.

The furniture giant has bought its North West-based rival for £25m it announced today, as the legal wrangling which forced Sofology to rebrand is clearly water under the bridge.

Two years ago, DFS won a court battle in 2015 with Sofology, then named Sofaworks, over trademark infringement, forcing it to change its name. It had only just changed its brand from CSL in 2013, and took out a newspaper ad to announce the change and make a sly dig at then-rival DFS.

The Golborne-based business has a network of 37 UK stores and reported revenues of £143m for the year to December 2016.

It said that an EBITDA loss of £2.7m was impacted by exchange rates on cost of goods sold and disruption following the Sofology rebrand.

But over the past 18 months it has invested £5m in technology, including retail solutions in omni-channel tracking and attribution, visualisation technology and personalized marketing content delivery, which clearly appealed to DFS, who announced it would be sharing these innovations across the enlarged group.

Sofology CEO Jason Tyldesley and management team will continue to lead the business post completion.

DFS said the addition of the company will add a “strong distinctive brand” to the group’s portfolio, building upon the Dwell and Sofa Workshop acquisitions.

Ian Filby, CEO of DFS Furniture plc, commented: “While the UK furniture retail market continues to be very challenging, we remain focused on making strategic progress to strengthen our position in living room furniture.

“This Acquisition represents a clear opportunity for DFS to accelerate our proven strategy of broadening our appeal, generating substantial long-term returns for shareholders underpinned by well-understood synergies.

“Sofology’s distinctive market position is a good fit with our existing brands. Jason and his team should be congratulated for creating a fantastic and fast-growing business and I’m looking forward to working with Jason and the team as they continue to grow Sofology as part of the Group. ”

Dwf advised Sofology on the transaction. GCA Altium is acting as financial adviser to Sofology.