DFS profits rise 11.4% as sales slip

Sales however slipped 2.2% to £638.4m in the year to July 30.

DFS chief executive Ian Filby said that the “climate of great economic uncertainty and falling consumer confidence” hit sales in the second half. He added that DFS expects the slow down to continue to affect like-for-like sales in the current financial year.

Filby said: “Our plans have been made on the assumption that there will be no early improvement in the trading environment, and are once again focused on the areas within management’s control: ensuring that DFS continues to increase its market share by offering an outstanding proposition and providing excellent service both in store and online, and making us accessible to even more customers through our targeted programme of store expansion, financed from our strong cash flow.”

The 80-store retailer’s expansion programme represents a shift in strategy for the retailer, after years of static store numbers.

Five stores have been opened since the year-end, and at least five more are planned in the current financial year.

Filby said: “I am pleased to report good results for the financial year ended July 2011, despite the very challenging trading environment.”

He added that in the first full year under Advent International’s ownership, DFS’ focus on driving market share and improving efficiency has delivered record EBITDA and continued strong cash generation. Advent acquired DFS from founder Lord Kirkham in April 2010.

Filby said: “This year’s good results are a testimony to the hard work and commitment of DFS’s people, and their determination to deliver great customer service in a most challenging trading environment.”

He said DFS will continue to focus on managing margin and costs, maximising cash generation and maintaining a robust balance sheet.

Filby said: “Our strategy of continued innovation in products and services, measured store expansion, and investment in the DFS brand and our people, will provide a strong platform for profitable growth and DFS has excellent prospects for the future.”