DFS Furniture returns to profit amid cost cuts and subdued demand
Upholstery retailer reports £32.9 million pre-tax profit for year to June 25, with revenue above £1 billion as it tightens costs and gains market share from Sofology.
DFS Furniture has returned to profit for the year ended June 25, reporting a pre-tax profit of £32.9 million on revenue of more than £1 billion, as the upholstery retailer navigates a subdued consumer environment and higher labour costs. The group swung to a pre-tax loss of £1.7 million in 2024.
Like-for-like order intake rose 10.2% for the year, with DFS and Sofology both gaining market share. The company completed a £50 million cost-cutting programme a year ahead of schedule, using its scale, data and technology to boost efficiency. Net bank debt fell from £164.8 million to £107 million, ahead of expectations, and management said it would press to further strengthen the balance sheet in the new year.
Chairman Steven Johnson said the group remained focused on disciplined cost management in the face of inflationary headwinds from the National Minimum Wage and National Insurance, and will continue to actively manage the cost base in FY26 as business rates and wage costs are expected to rise. The savings achieved to date demonstrate the ability to stay agile and reshape operations in light of market conditions.
Chief executive Tim Stacey said the company grew profits and cash flows in a weak market by concentrating on controllable factors and executing the strategy. Demand drivers in the upholstery sector remain delicately balanced with consumer confidence below the long-term average and inflation elevated, though housing transactions are recovering and consumer savings remain high. Margins have improved and the cost base has been significantly reduced, supporting a cautious but optimistic outlook.
The group maintained its dividend suspension and said it would re-evaluate this policy in the current year.
DFS shares rose in early trading, reflecting investor relief at profitability, though gains were tempered by ongoing questions about consumer credit costs and the sustainability of elevated wage and rate pressures.
Analysts noted that DFS's cost control and margin improvements helped deliver results above initial guidance and that the brand's market position remains solid, but industry volumes are well below pre-pandemic levels. They caution that a broader upholstery market recovery will depend on consumer credit costs and interest rates.
Looking ahead, DFS said the first 12 weeks of its new financial period were in line with expectations and it plans for profit growth in 2026 despite an expected near-term market lull.
