DFS Furniture has posted a sharp rebound in profits and a significant reduction in leverage for the financial year ended 29 June 2025, according to its latest financial report, which was released today (25 September).
The group, the UK’s leading retailer of living room and upholstered furniture, reported a 10.2% like-for-like order intake increase against a prior-year decline of 1.8%.
Reported order intake rose 8.7%, while gross sales climbed to £1.39bn (FY24: £1.31bn) and revenue reached £1.03bn (FY24: £987.1m).
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Gross margin expanded to 56.5%, up 70 basis points on the prior year, reflecting cost of goods optimisation and improved commercial proposition. Underlying profit before tax rose to £30.2m, compared with £10.5m a year earlier, while reported profit before tax swung to £32.9m, up £34.6m on last year’s loss.
The group also generated £57.8m in free cash flow, reducing net bank debt to £107m (FY24: £164.8m).
The business said progress had been possible due to leveraging scale and vertical integration, with exclusive brand partnerships now representing more than 40% of brand sales, while logistics and manufacturing improvements are driving efficiencies.
Also beneficial has been investments in product innovation and a proprietary data and insights platform to enhanced customer experience and investments in people, diversity and inclusion, which have improved engagement and reduced attrition, said the report.
Both the DFS and Sofology brands gained market share during the year, supported by investment in an interest-free credit offer to stimulate demand in a weak market.
Trading in the first 12 weeks of the new financial year has been in line with expectations. The board said it is comfortable with current market consensus and expects further profit growth in FY26, driven by margin progression and cost discipline, despite subdued consumer conditions.
Tim Stacey, group CEO, said he believed the customer proposition “has never been in better shape and that all elements of our vertically integrated business model are working efficiently and effectively”.
“Through focusing on what we can control and executing our strategy we have grown profits and cash flows in a weak market environment,” he said.
“The market demand drivers for the upholstery sector remain delicately balanced. Consumer confidence remains below the long-term average and inflation remains elevated but housing transactions have been recovering, consumer savings levels are relatively high and interest rates look set to fall.”
The board reiterated its confidence in achieving medium-term targets of £1.4bn revenue and an 8% profit-before-tax margin.
Stacey added: “Given the market share gains that we have made in the last few years, the recovery in our gross margins and the significant reduction in our cost base, despite inflation, I am optimistic about the future.
“We will continue to focus on what we can control and, even in a subdued market, we expect to grow our profit before tax in FY26 and further strengthen our balance sheet.”
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