DFS has reported a 58% fall in pre-tax earnings for the primary half of its monetary yr however pointed to a pick-up in gross sales as retailers battle powerful buying and selling circumstances.
The UK’s greatest impartial furnishings retailer up to date the market on its efficiency throughout the 26 weeks to 27 January, saying it had benefited from its acquisition final yr of smaller rival Sofology.
It purchased the chain for £25m regardless of issues the sector was heading for harder instances amid a slowdown within the housing market, tighter credit score circumstances and a squeeze on family budgets due to wage development failing to maintain tempo with inflation.
DFS mentioned pre-tax earnings of £7m mirrored £four.6m in prices and different prices associated to the acquisition of Sofology and the smaller, upmarket Multiyork model in December.
It mentioned complete income would have fallen however for the spending spree – rising four.three% to £396.1m regardless of “difficult” buying and selling circumstances remaining – with Toys R Us and Maplin amongst retailers to fall by the wayside in latest weeks.
:: Choose rescue plan may see shops shut
The chain mentioned a multi-channel method was delivering outcomes and it was on observe to develop underlying earnings within the monetary yr.
DFS chief government Ian Filby mentioned: “Now we have seen a strengthening buying and selling efficiency throughout the primary half of the monetary yr and thru February into March.
“We due to this fact stay assured that, regardless of the present difficult market circumstances, the group will ship modest development in EBITDA and generate sturdy cashflow throughout this monetary yr, in-line with our expectations.”
Shares have been up virtually 6% in early buying and selling.
Neil Wilson, senior market analyst at ETX Capital, mentioned of the outcomes: “Broadly talking, DFS is managing to deal with the broader downturn in retail fairly properly.
“The collapse of Feather & Black, Warren Evans and Multiyork, whose property DFS has acquired, served to point the extreme stress in the marketplace and the chance for these with sufficient scale to see it out.
“As we’ve got famous on a number of events, this firm has been right here earlier than, dealing with recessions and property market downturns that forestall prospects forking out on large ticket objects.”
He added: “Scale, flexibility and the vertically built-in enterprise mannequin are all serving it properly, while the acquisition of Sofology gives good optionality and strengthens its on-line/omnichannel providing.
“The failure of rivals ought to little doubt additionally assist development in gross sales and market share.”