DFS profits to be hit after 'weaker trading' during its second half

The sofa specialist previously said EBITDA for the year ending July 29 would be between £82m and £87m.

DFS said in a post-close trading update that it now expects that figure to be closer to the £82m mark, following a 4% drop in revenues during the second half of its financial year.

Sales grew 1% across the full year, driven by a 7% jump in its first half.

DFS had warned in June that revenue during its second half had been weaker, following slumps in footfall and customer orders during April, May and June.

However, it insisted that was “an industry-wide issue”, sparked by an “uncertain” economic environment, the snap general election and warmer weather during May and June.

DFS said that its summer Sale in July “started satisfactorily” as it bids to bounce back from a turbulent period of trading.

‘Strategic progress’

Despite falling sales during its second half, DFS maintained that it made “strategic progress” across the year, as it pressed ahead with plans to broaden its appeal to customers, boost its multichannel credentials, optimise its use of retail space and grow its store portfolio both in the UK and overseas.

Last week, DFS snapped up rival Sofology in a £25m deal.

DFS said the acquisition of the 37-store chain would broaden its appeal to customers “through Sofology’s distinctive consumer proposition” and allow it to leverage Sofology’s “technology-led omnichannel” model.

The retailer has also penned a partnership with Joules to manufacture and sell its first ever sofa collection, which will be rolled out to stores in late 2017.

DFS said in its statement: “While the UK furniture market is currently very challenging with the outlook still uncertain, we remain focused on our growth strategy to deliver substantial long-term returns for our shareholders.

“Although revenue growth is likely to be harder to achieve in the short term than in the recent past, we have identified opportunities to drive operating efficiencies and product margin growth.”

Despite the trading landscape, DFS insisted it would “maintain” plans for growth investment and said it was “confident that this will allow us to continue to outperform the market over the longer term.”

DFS expects to reveal its full-year results on October 5.