Pre-tax profits tumble at DFS but revenue improves
Doncaster-based DFS Furniture has reported half-year results which reveal its half-year pre-tax profits dropped 58% to £7m but revenue increased 4.3%.
Publishing results for the 26 Weeks to 27 January 2018, DFS Furniture said its pre-tax profits stood at £7m – down from £16.7m for the same period the previous year. It said this was due to £4.6m of non-underlying costs and the impacts of acquiring Sofology – a £25m acquisition which completed in December.
Its revenue was £396m, a 4% increase on £379m in H1 2017; which the firm said reflected increasing scale and relative market leadership following the recent acquisition of Sofology.
Its revenue before acquisitions was £366.5m, down 3.5%, which DFS said reflected the expected challenging market environment, but it was 3% higher over a two-year period
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 furniture firm, whose £25m acquisition of Sofology completed in December, said there had been a US Dollar related gross margin impact in DFS of around £7 m which had been fully mitigated, with hedging in place through FY19.
Its underlying EBITDA before acquisitions was £30m (2017: £32.4 million), with the 7.4% decrease reflecting lower revenues. DFS said benefits of its ongoing operating efficiency programmes now demonstrably flowing through
DFS said its growth strategy was on track and that it had reported double digit growth in DFS online traffic and transactions, with gross sales of the Group’s online channels in the last twelve months now over £160m on a pro forma basis.
It said the firm had three new DFS standard-format stores on-track to deliver under 21 months payback with ongoing strong lease-adjusted returns on capital. A DFS small store trial extended with its first retail park format in Chelmsford.
The firm opened a new store in the Netherlands and two in Spain during the period.
