Numis cuts DFS Furniture's 2016 profit forecast

DFS Furniture’s shares declined on Wednesday as Numis cut its full year 2016 pre-tax profit forecast by £1m to £62.5m after the company warned of an uncertain outlook.

The group reported underlying earnings before interest, tax, depreciation and amortisation rose to £31m in the first half from £27.6m in the same period the year before as group sales increased 7% to £461.3m.

The growth was driven by 6.2% growth in like-for-like sales and increased contributions from its Sofa Workshop and Dwell brands.

Free cash flow was up 7.1% to £37.7m and the furniture retailer lifted its interim dividend by 12.9% to 3.5p.

However the company warned it was “not clear what the impact and outcome will be on consumer confidence and sterling” ahead of Britain’s referendum on its European Union membership on 23 June.

Numis said given the uncertain outlook and full impact net international losses (£2-3m), it reduced its full year pre-tax profit.

Yet the analyst said with “solid strategic progress being made and the potential for cash returns getting closer, we retain our positive stance”.

Numis reiterated an ‘add’ rating and target price of 340p.

Shares fell 4.74% to 309.60p at 1041 GMT.