DFS reports surge in profits

DFS's Joules range
DFS's Joules range
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​​DFS Furniture said first half profits more than doubled although it warned of "particularly challenging" market conditions in 2019 given the current political and economic uncertainty over Brexit.​

The group's new chief executive Tim Stacey said: "The two risks are the overall impact on consumer confidence and how that influences the sofa market, and how we bring products from our European partners through the ports.
"We can't do a lot about consumer confidence, but we do use multiple ports such as the Teesside ports and Felixstowe - the less congested ports."
The firm isn't stockpiling and said it can switch production to its sites in Yorkshire, Nottinghamshire and Derbyshire if it needs to.
Just over half of DFS's finished goods come from mainland Europe or China so any hold-ups could hit profit and cash generation.
Mr Stacey said: "While we have sought to mitigate these, their ultimate impact is uncertain and have the potential to affect our overall financial performance in the year.
"We will continue our preparations to minimise the disruption as part of our regular risk-mitigation process, until the UK and EU's path forward is clear."
The upholstery retailer reported ​strong like-for-like sales growth of 6.6​ per cent​ in the 22 weeks to December 30.​
​The Doncaster-based​ ​​group​​, which sells sofas, recliners and beds, said pre-tax profit for the 22 weeks more than doubled to £14.1m from £6.2m a year earlier.
The firm was boosted by online sales and also benefited from orders placed by customers who had deferred purchases during the unusually hot summer in 2018.
"​In May, June and July there was a level of deferred purchases," said Mr Stacey.
​"​Half of what we lost in those three months came back. Online is also a real driver of the business."
Online sales rose 22 per cent over the 22 week period.
He said Brexit caution has hit the market in 2019 and the group saw lower levels of trading in January and February.
"The market is at minus one, minus two. I think that will continue," said Mr Stacey.
"The benefits of our investments in our online channels, delivery networks and the development of our brands help mitigate the impact of a market which we expect to remain particularly challenging in 2019 given the current political and economic uncertainty.
"Notwithstanding a softer start to 2019, and assuming no weakening of this environment, our profit expectations for the financial year remain unchanged."​
Group revenue ​in the 22 weeks to December 30 rose 29​ per cent​ to £422​m, while underlying earnings climbed 2​4 per cent to £3​3m.
Like-for-like sales at ​DFS's ​Sofology ​division rose 14​ per cent​ and DFS is on track to achieve £4​m of cost savings from its acquisition of the specialist brand.
Analysts at Peel Hunt said the company ​i​s a strong player in a difficult market, which could benefit as rivals buckle under the pressure.
"Upholstery hasn't been the easiest market to trade in for a while, but DFS is getting stronger relative to its peers," they said.
"Indeed, it may be a while before consumer confidence improves again - who knows? - but we always think of things on a slighter longer canvas and we have already seen the likes of FABB go under.
"Other retailers are struggling for credit insurance, we think, and any further shake out can only be good for DFS."