Pre-tax profits more than half at DFS thanks to acquisitions

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DFS

DFS has endured a huge drop in profits amid its interim results, blaming its recent acquisition of Sofology for tumbling figures.

In the six months to January 27, the furniture retail group saw pre-tax profits more than halve, dropping 58 per cent from £16.7 million to £7 million.

Revenues also declined 3.5 per cent at DFS to £366.5 million, but this was boosted by its recent acquisitions – which also included a £1.2 million takeover of collapsed Multiyork’s assets.

Including the increased revenue from these recent procurements, sales jumped 4.3 per cent to £396.1 million.

Despite facing torrid conditions in the furniture sector, the results fell in line with expectations and chief executive Ian Filby said he “remained confident” the group would deliver modest growth over the rest of the financial year.

“We have seen a strengthening trading performance across the first half of the financial year and through February into March,” he said.

ETX Capital’s senior market analyst Neil Wilson said the collapse of many of its rivals had been a blessing in disguise for the retailer.

“The collapse of Feather & Black, Warren Evans and Multiyork, whose assets DFS has acquired, served to indicate the severe pressure on the market and the opportunity for those with enough scale to see it out,” he said.

“Scale, flexibility and the vertically integrated business model are all serving it well, whilst the acquisition of Sofology offers good optionality and strengthens its online/omnichannel offering.

“The failure of rivals should no doubt also support growth in sales and market share.”

The results prompted DFS shares to rally 5.8 per cent in this morning’s trading.

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