- Furniture retailer meets cost cutting target early after living wage and NI hikes
DFS Furniture has returned to profit after navigating a ‘subdued’ consumer environment and a sharp rise in labour costs to achieve double-digit growth in customer purchases.
The retailer, which slumped to a reported pre-tax loss of £1.7million in 2024, has seen trading improve this year as consumers have prioritised big-ticket purchase and DFS has made efforts to clamp down on costs.
DFS posted a reported pre-tax profit of £32.9million for the year to 25 June as revenues ticked 4.4 per cent higher to top £1billion.
The group, which is targeting annual revenues of £1.4billion of the medium-term, told shareholders DFS and and sister brand Sofology both saw market share gains over the year as like-for-like order intake jumped 10.2 per cent.
DFS achieved a £50million cost-cutting programme a year ahead of schedule, it said, with the group focusing on using its scale, and improved data and tech to help boost efficiency.
It also managed to slash net bank debt from £164.8million to £107million, ahead of expectations, and said it would work to further bolster its balance sheet this year.
Sitting pretty: DFS and and Sofology both saw market share gains over the year
Chairman Steven Johnson said the group had ‘maintained [its] focus on disciplined cost management’ in response to ‘significant inflationary headwinds due to the well-publicised increases in the National Minimum Wage and National Insurance as well as volume related variable cost increases’.
He added: ‘We will continue to actively manage our cost base in FY26 in the face of a significant increase in business rates in April 2026 and an expected further increase to the National Minimum Wage.
‘The savings we have made to date demonstrate our ability to remain agile and reshape our operations in light of prevailing market conditions.’
DFS said trading through the first 12 weeks of its new financial period has been in line with expectations and the group is ‘planning for profit growth’ in 2026 despite ‘our expectation for a subdued market in the near term’.
Chief executive Tim Stacey said: ‘Through focusing on what we can control and executing our strategy we have grown profits and cash flows in a weak market environment.
‘The market demand drivers for the upholstery sector remain delicately balanced. Consumer confidence remains below the long term average and inflation remains elevated but housing transactions have been recovering, consumer savings levels are relatively high and interest rates look set to fall.
‘Given the market share gains that we have made in the last few years, the recovery in our gross margins and the significant reduction in our cost base, despite inflation, I am optimistic about the future.’
The group maintained its ongoing dividend suspension but told investors this would be re-evaulated this year.
DFS Furniture shares were up 3.7 per cent to 155.5p in early trading, having added 11.5 per cent since the start of the year and around 28 per cent over the last 12 months.
Adam Vettese, market analyst for Etoro said: ‘The company’s disciplined focus on cost control and margin improvement has driven pre-tax profit above the top end of guidance, with net bank debt and leverage reduced well ahead of expectations.
‘Double digit order intake growth, significantly outperforming the subdued UK upholstery market, demonstrates the strength of DFS and Sofology’s brand propositions.
‘That said, gross sales lagged order growth, reflecting some operational factors and ongoing demand fragility, with industry volumes still more than 20 per cent below pre pandemic levels.
‘Sharply higher interest free credit costs and a continued suspension of the dividend remain watchpoints for investors, as does sector-wide sensitivity to consumer and housing trends.
‘Nonetheless, DFS is a clear market leader with proven self-help levers, sound execution, and improved financial resilience, and stands out as well placed to benefit when market volumes eventually recover.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .