Furniture firm lowers profit forecast in interim results

DFS Furniture has issued a lowered profit forecast of between £20m and £25m as it published interim H1 results showing a 7% decline in revenues.

In September it forecast forecast full-year profits of between £30m and £35m, but gross sales fell further than expected to £39.4m in the six months to 24 December, down 5.6% on the same period last year. Demand has weakened significantly since January, the firm added, and it now expects second half revenues to be 8% to 10% lower than last year.

The firm said its gross margins had improved from 53.8% to 56%, and it had gained a record level of 38.5% market share in the upholstery market, but said the sector was more volatile and challenging than expected.

Chief executive Tim Stacey said, “Whilst the current macroeconomic situation has presented many challenges, we are pleased to have extended our market leadership while reporting a resilient profit performance through the first half.

“As a result of weaker market demand we have lowered our FY24 profit guidance to £20-£25m, excluding the potential risk of Red Sea delays which we continue to monitor closely. This reflects Revenue guidance reducing by £60-65m, partially mitigated by good progress on our Cost to Operate programme.

“We remain confident in both our long-term growth strategy and the capability to deliver on our objectives. We remain well positioned to improve our profit margins without market recovery and remain confident in delivering our 8% PBT target when the market recovers.”