Sofa seller DFS gets hard landing in the City after tattered profits

Profits at DFS Furniture slumped 22% today as the retailer counted the cost of a “very challenging” summer for big-ticket sofa sales.

The slide in full-year profits to £50.1 million followed declines in store footfall and customer orders in the election period between April and June.

However, chief executive Ian Filby said trading had stabilised since early July, with the sofas company hoping to return to profits growth next year.

Filby said: “It was a tough three or four months but the market tends to balance itself out over a longer period. That appears to be happening this year.”

The shares, which fell sharply in June after a profits warning, were down 6%, or 14.25p, to 210.75p today.

DFS also trades as Sofa Workshop and Dwell and has 113 outlets in the UK and Ireland.

Filby expects to add another three stores over the coming year, while integrating the acquisition of 37 Sofology shops once regulatory clearance has been given.

It is also rolling out a licensing partnership with retail brand Joules. Such deals have been an area of growth for DFS, with a 20% uplift in upholstery orders.

The slowdown in trading in the second half compared with 7% gross sales growth at the half-year stage. Sales across the full financial year increased by 1.1% to £990.8 million.

The full-year increase was driven by a much better performance at the Dwell and Sofa Workshop brands, which offset a 0.6% decrease in DFS revenues.

Dwell opened 15 stores and a new national warehouse in the year, doubling the size of its retail network.

The company said it would continue to invest heavily in marketing spend. It saw some media cost inflation early in the financial year, but this has since reversed and the company expects the deflationary trend to persist into 2018.