The Doncaster-based group said people have more disposable income and consumer confidence is growing, with the market expected to show growth of three per cent a year.
DFS CEO Ian Filby said: “People have got more confidence to invest in buying a new sofa and commit to upgrading their homes.
“Consumer confidence is back to pre-credit crunch levels. The average Briton feels they have more disposable income.”
However he said customers are more cautious than they were before the global economic downturn.
“The consumer has adopted a more canny way of buying. They’re certainly not splashing out,” he said
The group, which plans to roll out stores in the Netherlands, said the business has “excellent” prospects to deliver long term profitable growth.
This has been boosted by a move into more aspirational ranges following an exclusive partnership with upmarket magazines Country Living and House Beautiful and a separate tie up with high street fashion retailer French Connection.
The group has also acquired Sofa Workshop and Dwell and is in the process of turning the businesses around.
“We are broadening the appeal of the brand,” said Mr Filby.
“Think of Specsavers. You can still get two for one glasses, but they have expanded their appeal by going into designer glasses.
“Our heartland is young couples and young families. We offer fantastic value for money and our opening price points have never been so compelling.
“But much the same as Specsavers, these partnerships are bringing us a more affluent audience. Country Living works with an older audience and Dwell and French Connection work incredibly well with young, affluent, urban couples.”
Customers can visit Dwell and Sofa Workshop in standalone stores and on their websites.
Mr Filby said the plan is to open both chains as standalone shops within DFS stores and the first will open in Glasgow and Gateshead.
He was speaking as the group announced a trading update for its financial year to August 1.
Data going up to July 18 shows that gross sales rose seven per cent on last year.
Mr Filby said the group delivered a good performance through the second half, with gross sales up 4 per cent.
He blamed the reduction in growth rate in the second half on more demanding comparatives and an extra trading week last year.
“We had a very strong second half last year. Also this second half is a week shorter so we are very comfortable with four per cent growth,” he said.
DFS said Sofa Workshop and Dwell have both continued their recovery since they were acquired in 2013.
Both made a positive contribution to sales growth, contributing around one percentage point to group growth both in the second half and the full year to date.
However, DFS said that due to their scale and the stage of their turnaround, their profit contribution is limited.
The company said that given the strength of second half trading to date, the group expects to deliver a record performance for the full year.
The board plans to announce the group’s first dividend as a public company in October, in line with plans announced at the time of the IPO in March.
The group, which has 105 stores in the UK and Ireland, plans to open three to five new stores a year, predominantly in the UK.
It opened its first store outside the UK and Ireland at Cruquius in The Netherlands last November.
It reported encouraging trading in Holland and said it will open another two stores there in the coming year. Mr Filby said Holland has the potential for around 20 stores.
The group is looking at other countries to expand into, but declined to be drawn on where they are.