DFS shrugs off shoppers’ Budget worries as orders rise

Sofa chain DFS Furniture has said it expects to notch up “strong” profit growth in its first half despite a subdued market and consumer uncertainty ahead of this month’s Budget.

The group said orders have risen in the first 19 weeks of its financial year in an “encouraging start”, while “self-help” cost-cutting measures are seeing it weather rising inflation and soaring staff costs.

Tim Stacey, chief executive of DFS, said: “By continuing to execute our strategy we have made a strong start to the year.

“Despite the upholstery market remaining subdued, we have grown order intake across both our retail brands – ahead of the market – and progressed our gross margin and cost base initiatives, leaving us in a good position to deliver strong first half year on year profit growth.”

The firm said it was sticking with guidance for underlying full-year pre-tax profits of £40.6 million.

It reported underlying pre-tax profits of £30.2 million in the year to June 29.

But the group added it was “mindful of the broader macroeconomic environment and the uncertainty created by the upcoming autumn Budget”.

“Whilst the macroeconomic backdrop remains uncertain in the short term we will keep focusing on what we can control,” Mr Stacey said.

DFS reached its target for £50 million in annual cost savings in the year to June – ahead of target – after delivering another £25.5 million in cuts over the financial year, helped by increased use of technology.

This offset a 2% rise in costs, including its staff wage bill, following the rise in national insurance contributions and minimum wage increase.

The group has been focusing on using its scale, and improved data and tech to help boost efficiency as it also looks to stage a turnaround after sinking to a bottom line loss in 2023-24.