DFS has announced its preliminary results for the 52 weeks ended 28th June 2026 (FY26), citing highlights including "significant earnings growth in a subdued market", with uPBT(A) up 48.7% to £44.9m.
Market share stood at a record high of 40%, says the retailer: "Distinct brand propositions provided resilience, with Sofology outperforming the wider market, delivering order intake growth of 2.6%, supported by its higher-income customer base, strategic range refreshes, and successful promotional execution".
The year also saw DFS scale its non-upholstery 'Home' category, delivering 10.9% order intake growth across beds, mattresses, dining and living room furniture, supported by mezzanine rollout trials that provide "a strong blueprint" to grow its share in this adjacent £5b market.
Gross margin expanded by 160bps to 58.1%, achieving the group's strategic target, and DFS says it onboarded three third-party retailers onto The Sofa Delivery Company platform during a successful 'test and learn' phase, "monetising spare logistics capacity to unlock capital-light B2B revenue".
The retailer says it is seeing record customer satisfaction: "All areas of our vertically integrated model are performing well, contributing to record established customer net promoter scores (up 7% YoY).
"Colleague engagement scores increased significantly (up 19% YoY), supported by the successful roll-out of our new group purpose, mission and core values.
"Strong free cash flow generation of £40.3m reduced net bank debt by £38.0m to £69.0m, reducing leverage from 1.4x to 0.9x."
On current trading and outlook, DFS says order intake in the first 12 weeks of FY27 was down 2.5% YoY, in line with expectations (notwithstanding extreme weather affecting footfall and upholstery consumer demand in July and August).
"While cautious on the broader macroeconomic backdrop and anticipating a subdued market environment, our operational execution and disciplined cost management position us to deliver moderate profit growth in FY27 in line with analyst consensus," says DFS.
"Core UK upholstery market volumes remain approximately 20% below pre-pandemic levels. Given the operational leverage within the business, any top-line recovery from market normalisation is expected to deliver high profit growth, with revenue-to-profit drop-through expected at around 40%.
"The board reaffirms its confidence in the group achieving its medium term targets of £1.4b revenue and 8% PBT margins. These ambitions are underpinned by clear structural levers – gaining share in the upholstery market and the adjacent £5b Home market through new Sofology showrooms and mezzanine expansion, leveraging shared platforms and capitalising on future market recovery."
Group CEO Tim Stacey says: "The performance delivered in FY26 demonstrates the fundamental strength, agility and resilience of the DFS Group. By maintaining disciplined cost management, improving gross margins to 58% and empowering our colleagues through data and technology, we delivered robust earnings growth and significantly strengthened our balance sheet.
"Looking ahead into FY27, market uncertainty continues to influence consumer confidence and footfall, and we remain appropriately cautious regarding the broader macroeconomic environment. However, our scale, culture and technology investments – all fuelled by our new purpose and values – provide us with a clear advantage.
"We remain confident in our ability to outperform the market and deliver moderate profit growth in FY27, where we are comfortable with current analyst PBT forecasts. Looking further ahead, we remain fully focused on achieving our medium-term £1.4b revenue and 8% PBT margin targets and create sustained, long-term value for all our stakeholders."
