DFS reports jump in full-year sales and profit

FTSE 250 furniture retailer DFS reported a jump in full-year profit and revenue and lifted its dividend as its growth strategy pays off.

In the 52 weeks ended 30 July, underlying pre-tax profit rose to £64.5m from £33.3m the year before on revenue of £756m, up 7.1%.

The group declared a final dividend of 7.5p per share, giving a total dividend of 11p, up from 9.3p in 2015.

In addition, it said it expects a further special capital return to shareholders later in full-year 2017.

During the year, DFS opened three new stores in the UK and Republic of Ireland and a trial store in Bromley. It also said it plans to open a third small-format store in Crawley.

The group said its Netherlands stores were trading in line with expectations, with a store opened post year end.

In Online, it reported continued double-digit growth in gross sales, profit and site traffic.

The company said it broadened its appeal with 35% growth in branded upholstery orders and Sofa Workshop ranges performing well in DFS stores.

Chief executive Ian Filby said: “Our strong sales growth was sustained throughout the year, as many of our strategic initiatives continued to deliver ahead of our expectations within a healthy furniture market environment. This performance enabled us to deliver profit before tax at the upper end of market expectations despite the increased operating costs arising from our investment for the future in the development of Dwell, Sofa Workshop and DFS internationally.

“The business also remains highly cash generative, enabling us to fund our investments in store openings and refurbishments, and an accelerated programme of retail space conversion, while reducing gearing and increasing returns to our shareholders.”

DFS said that despite the uncertainties brought about by the UK’s vote to leave the European Union, it continues to be well positioned.

“Our business model, scale, vertical integration and highly flexible cost base all provide resilience against potentially weaker trading conditions, relative to the market,” said chairman Richard Baker.