The sofa company said it is optimistic about the months ahead, despite the current challenges faced by high street retailers
DFS profits more than halved in the first six months of the year, but the sofa company said it remains optimistic, despite current conditions wreaking havoc on the high street.
Shares rose more than 8 per cent in early trading as the group maintained an upbeat outlook for the rest of the year.
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UK retail sales pick up in February but outlook still weak
In the first half, group sales increased by 4.1 per cent to £514m, from £494m this time last year, while revenue rose 4.3 per cent to £396m from £380m in the first half of 2017.
Revenue before the acquisition of Sofology, which DFS bought for £25m in August last year, was down 3.5 per cent to £366.5m. The group said this reflected “the expected challenging market environment”.
Profit before tax was £7m, compared with £16.7m in the first half of last year. DFS said this dip was due largely to £4.6m in underlying costs and the impact of acquisitions, and was in line with expectations. The group maintained its interim dividend at 3.7p per share.
Chief executive Ian Filby said the group had seen “positive momentum” in trading during the first half “despite a market that is continuing to be challenging, and remains susceptible to falls in consumer confidence”. A number of retailers are struggling to stay afloat in the face of stagnant consumer spending, with Toys R Us and Maplin recently collapsing into administration.
"We have seen a strengthening trading performance across the first half of the financial year and through February into March. We therefore remain confident that, despite the current challenging market conditions, the group will deliver modest growth in (earnings) and generate strong cash flow across this financial year, in-line with our expectations,” said Mr Filby.