DFS trims sales target but holds on to profit guidance

Furniture retailer DFS has held on to full-year profit guidance despite a slight drop in first-half orders, as gains in market share and cost management has mitigated "challenging" trading conditions.

However, the company did lower its revenue forecasts for the full year to June 2024, pointing to sales of £1,020m-£1,040m, down marginally from September's guidance of £1,060m-£1,080m, due to "weaker-than-expected demand". That's down from the £1,089m of sales generated last year.

Group order intake was down 1.1% year-on-year in the 26 weeks to 24 December, with market volumes dropping by 9%, which DFS blamed on the record hot weather in September and early October as footfall tailed off.

"We have since seen demand recover and our profit guidance assumes market volumes are down -5% year on year through the remainder of the second half," the company said.

Nevertheless, the company said that underlying profit before tax and brand amortisation in the first half was "slightly ahead" of last year's £7.1m due to improved operational performance, manufacturing and sourcing, and lower costs.

As such, full-year profit guidance remains unchanged at £30-35m, compared with £30.6m reported the year before.

"Despite the weaker than expected market, good operational performance and progress on gross margins and lowering our cost base have enabled us to deliver a profit for the first half that is slightly ahead of the prior year and we remain on track to deliver our full year profit target," said chief executive Tim Stacey.

The stock was up 1.1% at 112p by 0828 GMT.