DFS sales and profits hit by warm weather in first quarter

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Sofas specialist DFS has posted a fall in first-quarter earnings and sales as it battled difficult market conditions.

DFS reported EBITDA of £7.2m in the period to October 26 compared to £10.2m last year. Sales edged down from £144m to £142.5m.

The retailer had already flagged that performance in the period, the least important quarter for DFS, would be affected by then hot summer weather. Soft trading has continued since.

After payment of a £20m dividend and £9.8m in interest to bondholders the retailer, which is backed by private equity house Advent International, had cash balances of £20m.

Chief executive Ian Filby said: “Our first quarter results demonstrate once again DFS’s ability to deliver consistently excellent cash returns despite any short term fluctuations in trading.

“Whilst the marketplace remains challenging, and the softness in order intake has continued into the autumn, our most important trading period is still to come and we are better placed than ever before to maximise DFS’s market share.”

He added: “We remain confident that our proven strategy will deliver continued outperformance and that DFS enjoys excellent prospects for long term profitable growth as the UK market leader in upholstered furniture.”

DFS opened two shops during the quarter, and will shortly open its 100^th branch. It also improved the functionality of its website and is drawing new custom as a result of initiatives such as its recent investment in Sofa Workshop.

Filby said: “Our brand partnership with Sofa Workshop will further broaden our customer appeal following our investment in this well-established premium brand.

“This builds on the success we have already achieved through the launch of exclusive ranges of high quality sofas handcrafted in the UK under the Country Living, House Beautiful and French Connection brands.”

The retailer has also agreed a contract with a second financier of customer credit. Filby said: “This provides additional security of supply for this important part of the DFS offer to consumers and the two contracts now cover in excess of our total requirement.”