DFS’ half-year profits have crashed but boss Ian Filby said he is confident in the business’ performance despite challenging market conditions.

Pre-tax profit dropped 58.1% to £7m in the six months to January 28 despite sales improving 4.1% to £513.8m thanks to the acquisitions of Multiyork assets and Sofology.

Without those acquisitions, revenue fell 3.5% to £379.9m.

Despite the knock to the retailer’s bottom line, Filby said he was “confident that, despite the current challenging market conditions, the group [would] deliver modest growth in EBITDA and generate strong cashflow across this financial year, in line with expectations”.

He attributed his confidence to “a strengthening trading performance across the first half of the financial year and through February into March”.

Underlying EBITDA during the six months fell 7.4% before the acquisitions and 9% afterwards. This marks an improvement on the year to date, during which it fell 16.5% and 17% respectively.

Expansion

The business said its strategy was “on track” and that it was hitting double-digit growth in online traffic and transactions, with web sales over the past 12 months reaching £1.6bn.

Its ranges with brands French Connection, House Beautiful, Country Living and Joules generated 8% growth.

In bricks and mortar, DFS extended its small-store trial with its first retail park format in Chelmsford and opened another three standard stores.

The retailer added that it had hedged for the whole of its 2019 financial year and had fully mitigated the impact of the US dollar on its gross margin.

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