DFS profits plunged by close to 50% in its preliminary results for the 52 weeks ended 25 June 2023.
The furniture retailer posted a pre-tax profit of £29.7m for the 52 weeks ended 25 June 2023, down 49.2% from £58.5m in 2021/22.
Revenue from continuing operations also fell by 5.3% to £1.09bn from £1.15bn the previous year, reflecting “a very weak market and high levels of input cost inflation”.
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But the business said it continued to win share in a “very tough market”, with a 2% share gain to a record 38% of the UK upholstery market.
Although it warned the wider economic environment led to an “incredibly challenging year” for the group, with the business having to balance the need to invest in the assets and resources to support future growth with caution, given market volatility.
As a result, DFS said the UK upholstery market has been under significant pressure and it estimates market order volumes were down 15% or more relative to pre-pandemic levels.
Chief executive Tim Stacey said: “The group is operating in one of the toughest economic climates we have experienced. Whilst we are confident the upholstery market will recover, forecasting the specific timing and pace of the recovery is challenging.
“We do, however, expect to generate a modest year-on-year increase in profit before tax in FY24 despite a relatively weak market in which we expect volumes will continue to decline across the next 12 months.
“Looking to the future as market volumes recover, we remain confident in achieving the financial performance set out at our Capital Markets Day in 2022 of £1.4bn of revenues at an 8% profit before tax margin.”
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