Profits almost halve at DFS as retailer suffers from ‘continued economic uncertainty’

Doncaster-based DFS Furniture has reported its full-year results which saw a 48.5% dip in pre-tax profits despite seeing revenues rise by 14.1%.

Publishing results for the 52 weeks ending 28 July, DFS announced that pre-tax profits came in at £25.8m – down from £50.1m for the same period the previous year.

The retailer of living room and upholstered furniture noted that this was due to “continued economic uncertainty for consumers, compounded by some exceptional hot weather over key trading periods in the final quarter.”

These factors contributed to DFS’ sales and profits for the full year falling below its expectations.

DFS, however, saw a slight rise revenue to £870.5m – compared to £762.7m achieved in 2017.

The company also unveiled the impact of the £25m acquisition of Sofology back in November. Sofology contributed £122.8m to the retailer’s revenue in the year and generated brand contribution of £26.5m and a loss before tax of £1.4m.

In addition, DFS is set for a change at the CEO position. Tim Stacey has been appointed as the retailer’s new chief executive, replacing Ian Filby. Stacey, who was previously the chief operating officer, will start leading the company at the end of the month.

Filby is set to take on the role of non-executive chair of Sofology over the next 12 months to October 2019.

Going forward, Stacey said that he intends to focus on “growing the core DFS business, driving like-for-like sales through the strengthening of our end to end customer proposition and by accelerating its omni-channel strategy.

“With the acquisition of Sofology, and the continued growth at Dwell and Sofa Workshop, it is now time to develop a true platform of services to be shared across the Group to reduce costs and increase capital efficiency; and we will exploit the revenue and earnings growth opportunities now presented by Sofology, Dwell and Sofa Workshop.

“I’m also keen to ensure that our plans are underpinned by a deeper, evidence-based understanding of our customers across the Group portfolio. We will continue our work in building these foundations.”

Filby added: “We have continued working to develop the Group’s strategic and market position; however financial results for the year reflected the exceptional  downturn in market demand we saw in the fourth quarter.

“We are pleased to note that the market has recovered since the start of the new financial year, with the Group seeing like-for-like order growth across all brands over the first nine weeks. We believe, however, we are benefiting from deferred purchases in the prior financial year and overall we expect the market to remain subdued into 2019, constrained by political risk and weak consumer sentiment.

“Notwithstanding this we believe the Group is well positioned to become stronger in this current environment, boosted by investment and acquisition benefits, and we have excellent prospects for profitable growth and attractive cash flow generation over the longer term.”

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