DFS downgrades profit outlook in tricky market

Furniture seller DFS has downgraded its expectations for the year, blaming a weak market it said it has managed to navigate well.

The business said it now expects to make between £30-35 million in pre-tax profit before brand amortisation.

The company said this is still in line with what analysts are expecting – but at the lower end of the £30-40 million the business previously guided.

Chief executive Tim Stacey tried to focus on the positives as shares in the company dipped by 2%.

“I’m pleased to report that the group has extended its long track record of achieving market share gains in a challenging market to what are now record levels,” he told shareholders on Thursday.

“We expect our profit for the year to be between £30 million and £35 million in line with external expectations.”

It comes as the business reported a 2.2% drop in revenue from continuing operations in the six months to the end of December, hitting £545 million.

Pre-tax profit dipped by more than two-thirds to reach £6.8 million, the business said, while net debt more than doubled to £136 million.

Mr Stacey said: “The share gains have gone some way to alleviating the impact of the weaker market we have observed in 2022 overall.

“Those gains built throughout the period, with the group delivering strong order intake growth in the second quarter.

“The order intake momentum has continued through the important winter sale period.”

He said a big rise in DFS’s costs and bids to keep prices down for customers have eaten into the company’s profit margin.