DFS enjoys comfortable rise in sales but warns over post-Brexit market slowdown
Sofa chain DFS has cheered rising sales and profits but said it was bracing for a potential market slowdown triggered by political and economic uncertainty.
The firm said pre-tax profits lifted 3% to £16.7 million in the 26 weeks to January 28, with gross sales jumping 7% to £493.7 million.
Revenues also climbed 7% to £379.9 million over the period, as it reaped the rewards from opening new stores and a double-digit rise in online sales.
Chief executive Ian Filby said the company's strategy had delivered "good sales growth and strong cash generation".
But he warned that sterling's Brexit-induced slump against the US dollar had "some impact" on margins in the first half of the year.
He said: "Consumer confidence to date has held up well, but we recognise that furniture retailing in the UK faces an increased risk of a market slowdown in 2017 because of the uncertain political and economic outlook.
"We are taking actions to mitigate these pressures through range management and supplier negotiations, and expect to see further benefits from these initiatives during the second half.
"The flexibility of our cost base, our investments in infrastructure and our vertically integrated business model add to our confidence that we are very well positioned to respond to economic headwinds and cost pressures while continuing to grow our share of the UK retail furniture market."
The collapse in the value of the pound following the Brexit vote has ramped up costs for British businesses and started to impact profit margins.
It came as a separate measure of DFS performance for the 52 weeks to January 28 showed that gross sales had broken through the £1 billion mark for the first time in the firm's 47-year history, rising 7% to £1.01 billion.
The Doncaster-based group announced a special dividend to shareholders of 9.5p per share and stood by its expectations for full-year pre-tax profits.
The firm, which owns the Dwell and Sofa Workshop brands, opened two new stores in Salisbury and Truro in Cornwall, while also overhauling existing sites in Banbury, Nottingham and King's Lynn.
It also launched 15 new Dwell stores and two Sofa Workshop shops in former DFS warehouse space.
DFS shares were up more than 1% in morning trading on the London Stock Exchange.