// Profits at DFS fall by £16.2m to £7.1m due to rising costs, particularly in the first quarter
// Although the furniture retailer said it achieved record market share
DFS saw a 16.2% slip in half-year profit amid rising costs, particularly in the first quarter, as a weak trading environment hit customer discretionary spending.
In the six-month period ending 25 December, pre-tax profit was also down at the furniture retailer, coming in at £6.8 million compared to £22.8 million a year ago.
Revenue from continuing operations also fell to £544.5m from £556.5m the previous year.
The business said its profit margins were reduced due to a combination of significant cost increases and the company’s strategy to remain competitive on price.
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But the business said it achieved a record market share in the period as it worked to broaden its appeal to a wider audience, adding that its order bank remains elevated and is equivalent to around £4 million of profit, which it expects to realise through its second half.
It also expects profit margins to improve from the second half onwards.
Group chief executive Tim Stacey said: “Profit margins have reduced over the last year due to a combination of significant cost increases and our commercial strategy to ensure that we continued to offer great value for customers in an environment where consumer discretionary spend was under pressure.
“We have however improved our gross margins in the first half of this year from H2 of FY22 and further still in the second half to date through product innovation and selected retail price increases. Cost headwinds are reducing and in some cases reversing and we expect our upward gross margin trajectory to continue as we execute our margin build back plan.
“At our capital markets day in March 2022 we set out our ambitions to grow revenues to £1.4bn and operate at an 8%+ PBT margin generating post tax free cash flows of 75%+. We continue to target that level of financial performance and have solid plans in place to deliver this.”
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