DFS ‘cautiously optimistic’ despite increased inflationary pressures

DFS said it recorded increasing sales with its order intake rising 10 per cent compared to the same period the year before.

It said trading is “in line with our expectations” at the start of its key winter sales period, but that there was a “less positive market outlook” for 2025.

Part of the reason for the rise in profit was that DFS cut its costs during the period in a bid to offset cost inflation.

However, DFS said it also expects to see an increase in costs this year, in part due to business tax rises announced in the October Budget.

Chancellor Rachel Reeves announced a rise in national insurance contributions (NICs) for employers and an increase in the minimum wage last year.

The NICs increase is designed to fund improvements to public services like the NHS, but it has come under fire from retailers for making it more expensive to employ people.

The company said on Friday that it has a “cautious view” on market demand in the first half of 2025 based on economic performance in the UK.

The trading update comes as new official figures showed that sales across all UK retailers unexpectedly declined last month in a blow to the sector during the all-important festive shopping season.

The important Winter Sale trading period has started in line with the company’s expectations, DFS said in its statement.

Tim Stacey, Group Chief Executive, said: "While the market remains relatively subdued, we are continuing to deliver on our self help initiatives having strengthened our position as the clear market leader, improved our gross margin and reduced our operating costs, all of which have helped us to deliver year on year profit growth.

“We remain focused on executing our plan, and are cautiously optimistic despite the increased inflationary pressures and less positive market outlook for 2025.

"Looking forward, we are confident that the group is well positioned to drive attractive returns for shareholders as the market recovers and we remain focused on delivering our 8 per cent PBT medium-term target."

The DFS business was founded in 1969 by Graham Kirkham with a single store near Doncaster, trading as Northern Upholstery.

Northern Upholstery acquired the assets of DFS Furniture Limited in 1983. It continued to expand its store footprint and acquired additional manufacturing facilities during the 1980s and 1990s.

DFS was listed on the London Stock Exchange in 2015 and, two years later, it acquired DFS Sofology, the third largest retailer of sofas in the UK which was the fourth addition to the DFS Group portfolio.

The group will announce its interim results for the period ending December 29 2024 on March 13 2025.