Hot weather dents earnings at DFS

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The summer heatwave hit profits at furniture retailer DFS, but the group said it is confident it can make up lost sales and outperform the market.

The Doncaster-based group said earnings fell 29 per cent to £7.2m in its first quarter to October 26.

Sales slipped from £144m to £142.5m.

DFS’s chief executive Ian Filby said the first three months of the year always make the smallest contribution to full year sales and profit.

“Whilst the marketplace remains challenging and the softness in order intake has continued into the autumn, our most important

trading period is still to come and we are better placed than ever before to maximise DFS’s market share,” he said.

During the first quarter the group opened two new stores in Liverpool and Ipswich, and will open a further new store in Torquay before

Christmas, taking it to the milestone of 100 DFS stores in the UK and Ireland.

Over the three month period the group launched a new website, designed for the growing number of customers who access the DFS website through tablets and mobile phones.

Mr Filby said the brand partnership with premium brand Sofa Workshop is broadening the group’s appeal to wealthier customers.

“This builds on the success we have already achieved through the launch of exclusive ranges of high quality sofas handcrafted in the

UK under the Country Living, House Beautiful and French Connection brands,” he said.

Despite the poor summer trading as people deferred sofa buying in favour of sunbathing, Mr Filby said the first quarter results demonstrated the group’s ability to deliver “excellent” cash returns despite short term fluctuations in trading.

Cash balances at the period end were £20.0m, down from £42.2m following payment £20.0m dividend to shareholders and £9.8m of interest to bondholders.

“The dividend underlines our confidence in the long-term prospects of the group, and provides a further demonstration of DFS’s consistent ability to return surplus cash to stakeholders,” said Mr Filby.

The group has signed a long-term contract with a second major financial institution to provide customers’ interest-free credit.

“This provides additional security of supply for this important part of the DFS offer to consumers and the two contracts now cover in excess of our total requirement,” said Mr Filby.

He added that the group believes its proven strategy will deliver continued outperformance and that “DFS enjoys excellent prospects for long term profitable growth as the UK market leader in upholstered furniture”.