Living room and upholstered furniture retailer DFS has reported a growth in first half profit as sales remain strong.
According to its interim results for the 26-week period ended 29 December 2024, total half year sales stood at £504.5m, down 0.1% from £505.1m against the same period the previous year.
Gross margin increased from 56% to 56.7%, while underlying pre-tax profit resulted at £17m, up by £8.3m from £8.7m year-on-year.
DFS said that its “compelling customer proposition” drove year-on-year order intake growth of +10.1% in a subdued market, with both the DFS and Sofology brands gaining market share.
DFS order intake rose +7.8% YoY; citing a “market leading interest free credit offer, product innovation and exclusive brand partnerships resonating with the customer with ‘La-Z-Boy’ recently added to the portfolio”. DFS total sales were slightly down by 0.5% to £523.1m from £525.6m.
“Growth was primarily driven through higher average orders values with an increase to the maximum interest free credit period used at select times to stimulate demand and enable customers to trade up to higher price point ranges. This can be seen in the sales mix of our typically higher price exclusive brand ranges such as Joules, Ted Baker and Country Living that reached a record high of over 41%.”
As for Sofology, order intake rose +19.1% YoY with a very positive impact from range changes driving higher order volumes. Total sales rose 8.5% to £152.5m from £140.6m.
“Continued strong progress in our cost to operate program remaining on track to deliver £50m annualised cost savings by FY26; operating costs down YoY and continued momentum on gross margin rate progression,” DFS added.
“Service levels across showrooms, manufacturing, the Sofa Delivery Company and post sales service are strong, reflected by some record NPS scores.”
DFS said it also has an objective of growing its Home (non-upholstery) offer, with a target of growing its market share from 1% to 4%, first focussing on the £3bn beds and mattresses market. “We have in previous years invested in technical infrastructure that allows us to operate a drop ship model and expanded some of our exclusive upholstery brand partnerships to cover bed frames.
“Last year we paused investment in marketing to drive awareness of our Home proposition until our balance sheet strengthens. We have clear plans to accelerate Home growth once we have deleveraged further.”
Trading through the first 10 weeks of the second half has “remained strong”, with order intake increasing from the +10% achieved in H1, with its year-to-date order intake now +11% YoY.
As a result of the continued strong trading, good cost control and assuming no further supply chain disruption DFS expects to outperform consensus expectations and deliver underlying pre-tax profit of £25-£29m.
Longer term the Board “remains confident” in achieving its £1.4bn full year revenue and 8% PBT medium-term targets.
Tim Stacey, Group Chief Executive Officer said: “Our improved profit performance in the first half is testament to the strength of our customer proposition, the dedication of our colleagues and our collective focus on operational excellence, evidenced through increased market shares and customer satisfaction scores.
“We are on track to deliver full year profit performance ahead of market expectations and our confidence in the Group’s capabilities and future potential has never been higher. Given our strong market position and relentless focus on executing our strategy, we are confident that we will achieve our £1.4bn full year revenue and 8% PBT targets in the medium term and deliver strong returns for our shareholders.”
