DFS Furniture sees bounce-back in upholstery markets

DFS Furniture reported a “more positive trend” in the upholstery market in a trading update on Friday, having noted a marked softening in its full-year results on 15 September, with “significant declines” in July and August.

The London-listed company, which was holding its annual general meeting, said that since early September, group order volumes had grown year-on-year, and also relative to the pre-pandemic 2019 comparator.

It said it had also seen continued evidence of positive market share gains from the latest Barclays-CACI market data.

“Our overall performance is in line with our mid case scenario - £36m profit before tax - for the full year,” the board said in its statement.

“We would expect profits to be weighted towards the second half given the order intake profile we have seen year to date, our made to order business model and revenue being recognised on the delivery of orders to customers.

“Whilst the macroeconomic outlook is uncertain and inflationary pressures remain high, we remain focussed on executing our strategy to lead furniture retailing in the digital age.”

DFS said its business had “proven to be resilient”, and given its “inherent strengths”, it was “well-positioned” to maintain its trend of market share gains across the economic cycle.

In March, the DFS board began a share buyback programme of up to £25m, and in September 2022 it announced its intention to purchase a further £10m of shares.

To date, around £25m of shares had been purchased under the programme.

The firm said the general authority for the programme was expiring at Friday’s annual general meeting, where a resolution to renew the authority would be considered by shareholders and, subject to approval of that resolution, the board said it intended to continue the programme for the balance of the £10m of shares.

Additionally, as DFS previously announced, Ian Durant was stepping down as chair on Friday.

Steve Johnson, currently chair of the remuneration committee, would replace Durant as chair with effect from the close of the annual general meeting.

“We are pleased to report that since mid-September we have seen positive year-on-year order volume growth,” said chief executive officer Tim Stacey.

“While we continue to be watchful of the macro economic environment, we continue to take market share and our market leading position, inherent scale and proven strategy give us confidence in our future prospects.”

DFS said it would provide further details on its performance at the post-close announcement in mid-January.

At 1057 GMT, shares in DFS Furniture were up 7.56% at 133.8p.

Reporting by Josh White for Sharecast.com.