Profits at sofa chain DFS Slump amid ‘challenging’ market
Profits at sofa chain DFS have tumbled after the group was thumped by Britain's faltering economy, falling consumer confidence and the Brexit-induced collapse in the pound.
The company booked a 22.3pc fall in pre-tax profits to £50.1m in the year to July 29, while revenue edged up just 0.9pc to £762.7m.
DFS pointed to a "very challenging furniture market", with chairman Ian Durant adding: "Continuing uncertainty in the economy led to a significant deterioration in the consumer market which impacted sales in the second half of the year.
"The continued weakness of sterling against the US dollar has also created a headwind for gross margins, some of which we have been able to mitigate."
Soaring inflation caused by the collapse of the Brexit-hit pound has pushed up shop prices for hard-pressed consumers, leading retail sales across the board to slump.
DFS flagged in August that profits would take a hit from uncertainty caused by the snap General Election and warm weather, which led to weak trading at its stores.
The retailer said it saw significant declines in store footfall and customer orders from April to June.
Chief executive Ian Filby added: "We have continued to make good strategic progress across all our key areas of growth, while our financial performance reflects the current challenges of the UK furniture market.
"Our recent strategic investments and operating efficiency programme support our confidence in our ability to deliver modest profit growth and cash returns in the current financial year and we continue to have excellent prospects for the long term."
DFS said that it will seek out efficiency savings as revenue growth becomes "harder to achieve".
Earlier this year DFS acquired rival Sofology in a £25m deal and will take over its chain of 37 UK stores.
In Ireland the company has four stores located in Galway, Dublin, Limerick, and Cork.