DFS has upgraded its full-year profit expectations in the wake of its interim results for the 26-week period ended 29th December 2024 (H1 FY25), in which the retailer reported YoY intake growth of +10.1%1, with both the DFS and Sofology brands gaining market share.
DFS' order intake was up +7.8%1 YoY, driven by its IFC offer, product innovation and exclusive brand partnerships (such as La-Z-Boy) resonating with the customer. Sofology's order intake was up +19.1%1 YoY, with "very positive impact from range changes driving higher order volumes".
The retailer also reports "continued strong progress in our cost to operate program remaining on track to deliver £50m annualised cost savings by FY26" and "operating costs down YoY and continued momentum on gross margin rate progression".
It adds that service levels across showrooms, manufacturing, the Sofa Delivery Company and post sales service were strong, reflected by some record NPS scores.
Underlying profit performance, uPBT(A) almost doubled to £17.0m, and the retailer delivered gross sales up +1.4% YoY, lower than the order intake growth of +10.1%, due to a strengthening trading performance through the period leaving its order bank in a resilient position entering H2.
Revenue was broadly flat YoY due to an investment in its IFC offer "to maximise cash gross margins in a challenging consumer landscape" – its gross margin rate was up +70bps YoY to 56.7% as a result of cost of goods savings and product margin improvement, continuing the positive momentum towards its 58% target, with gross margin up +£3.3m YoY.
Underlying operating costs (including depreciation and interest) were down £5m YoY, with efficiency savings more than offsetting inflation.
Trading through the first 10 weeks of H2 has remained strong, says DFS, with order intake increasing from the +10% achieved in H1, with YTD order intake now +11% YoY. "As a result of the continued strong trading, good cost control and assuming no further supply chain disruption, we expect to outperform consensus expectations and deliver uPBT(A) of £25-£29m," the retailer adds. "Longer term, the board remains confident in achieving our £1.4b full-year revenue and 8% PBT medium-term targets as set out in our 2022 Capital Markets Day."
Group CEO Tim Stacey says: "Our improved profit performance in the first half is testament to the strength of our customer proposition, the dedication of our colleagues and our collective focus on operational excellence, evidenced through increased market shares and customer satisfaction scores.
"We are on track to deliver full-year profit performance ahead of market expectations and our confidence in the group's capabilities and future potential has never been higher. Given our strong market position and relentless focus on executing our strategy, we are confident that we will achieve our £1.4b full-year revenue and 8% PBT targets in the medium term and deliver strong returns for our shareholders."
