DFS picks up rival Sofology in £25m deal
Sofa chain DFS has snapped up rival Sofology in a £25 million deal, just weeks after it warned over profits and an uncertain economic environment.
The acquisition will see DFS take over Sofology's chain of 37 UK stores and the group said it has already identified £4 million in annual cost savings as part of the tie-up.
Last year, Sofology reported revenue of £143 million but booked a statutory loss before tax of £8.9 million.
DFS boss Ian Filby said: "While the UK furniture retail market continues to be very challenging, we remain focused on making strategic progress to strengthen our position in living room furniture.
"This acquisition represents a clear opportunity for DFS to accelerate our proven strategy of broadening our appeal, generating substantial long-term returns for shareholders underpinned by well-understood synergies.
"Sofology's distinctive market position is a good fit with our existing brands."
The deal comes after DFS warned in June that it had seen "significant declines in store footfall", leading to a material reduction in customer orders.
It pinned the warning on "customer uncertainty regarding the General Election and the uncertain macroeconomic environment".
Consumer confidence has been battered by a series of factors triggered by last year's vote to quit the European Union.
The referendum result saw the pound collapse and inflation rocket, ramping up costs for British businesses and eroding consumer spending power.
DFS has over the past few years bought other rivals, including Dwell and Sofa Workshop.
The Sofology chief executive, Jason Tyldesley, and the current management team will continue to lead the business post completion.