DFS eyes overseas expansion after rise in sales

The Doncaster-based firm said adjusted earnings rose 16.5 per cent to £27.6m in the six months to January 31 and it reported record earnings of £86.2m over the last 12 months.

The group, which returned to the London Stock Exchange earlier this month, opened its first Continental European store in Holland last November as part of a drive to become a “truly world class” business.

Chief executive Ian Filby declined to be drawn on which countries the group will enter next although Germany is seen as an obvious next step.

“We are clearly looking at more countries than we’re operating in, but before we make strides in any jurisdictions we want to be clear where we are going in Holland. It’s making sure we can walk before we run,” he said.

The group has said it will look to open 15 to 20 stores in Holland.

DFS said it is confident it will post annual results in line with market expectations after reporting an 11 per cent increase in sales to £431.2m in the first half.

The group, which usually sees a stronger performance in the second half of the year, reported a pre-tax loss of £14.4m for the six months to January 31, up from £14.0m, following finance expenses of £30m.

Finance director Bill Barnes said that substantially lower interest costs going forward means the group will be profitable in future.

“The reduction in borrowings puts us in a great position to go forward,” he said.

“Historically what was a loss before tax will now become a profit. The losses won’t be there any more because of much lower interest costs on the business.”

The IPO enabled the group to refinance the business so it has significantly less borrowing.

Talking about the IPO, Mr Filby said: “We are very excited going forward. It’s another major step for the company.

“We have some really big ambitions for future growth and public ownership is a good platform for that.

“DFS is well positioned to deliver long-term profitable growth as one of the UK’s best-known brands, a major British manufacturer and the country’s leading retailer of upholstered furniture.”

He said that the IPO has greatly strengthened the group’s financial position.

“It has given us an excellent platform from which to fulfil our vision of taking DFS from a great British business to a world class business,” he added.

In addition to its international expansion, the group plans to open three to five stores a year in the UK.

“We’ve identified a good 20 stores we plan to open in the next few years,” said Mr Filby.

“We recently opened in York and we’ve also opened stores in Sheffield and Huddersfield.”

DFS now has 105 stores – 101 in the UK, three in Ireland and one in Holland.

It said that all its new stores, including Cruquius, are trading encouragingly while its online business made an “important contribution” to results.