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DFS set for record year after building on housing market

By Roger Baird

Published 23/07/2015

Increasing numbers of house moves have spurred profits to grow at furniture chain DFS
Increasing numbers of house moves have spurred profits to grow at furniture chain DFS

Sofa chain DFS Furniture is on track to deliver a record year as it takes advantage of Britain's buoyant housing market.

The Doncaster-based business - which has 106 stores in the UK, Ireland and the Netherlands - said sales lifted 4% in its second half of the year to July 18 thanks to strong demand for so-called "big ticket" items, spurred on by increasing numbers of house moves.

The firm, which has two stores in Northern Ireland, said the strength of its second half trading puts it on course for a record annual performance, with underlying results within market expectations, which saw shares jump almost 7%.

Brokers at Jefferies are forecasting a 7% rise in full-year earnings to £88.1m.

DFS, which returned to the stock market in March with a value of over £540m, is benefiting from strong housing market conditions, with official figures recently showing that property values increased by 5.7% in the year to May, up from 5.5% in April.

The business is expanding and plans to open three to five new UK shops a year.

It added that rising disposable incomes and consumer confidence put it in a strong position to maintain record sales and capture market share.

DFS competes against rivals such as Furniture Village and Sofaworks and commanded just over a quarter of the £3bn UK upholstered furniture market last year.

During the last year it opened stores in York, Ayr, Basingstoke and Oxford.

The group, which also includes Dwell and Sofa Workshop, said it opened its first store in the Netherlands last year and plans to open two more shops there in the coming financial year.

Jefferies added that with the retailer's solid statement and confident management outlook "we expect investors to increasingly buy into this market leader".

DFS was founded by Lord Kirkham from a single store in Doncaster in 1969.

The group was listed on the London stock market between 1993 to 2004 before Lord Kirkham took it back into private hands. It was then sold to private equity business Advent International for £500m in 2010.

The firm sold a 38% chunk of the business to new investors in March, raising £98m, which it says it will use to pay off debt and secure cheaper financing. The majority of the retailer is still owned by Advent.

Belfast Telegraph

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