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Wednesday 21 August 2019

DFS profits on track but Brexit uncertainty looms

The sofa retailer also announced the appointment of Mike Schmit as its permanent chief financial officer.

DFS said profits for the year will be just over £50 million (PA)
DFS said profits for the year will be just over £50 million (PA)

By Alys Key, PA City Reporter

DFS has affirmed its profit outlook for the year, but pointed to the weaker backdrop caused by ongoing Brexit uncertainty.

The sofa retailer reported underlying gross sales growth of 7% for the 52 weeks to June 30.

Online growth was particularly strong, growing 17%.

The company confirmed that profit before tax would rise about 35% to £50 million, in line with its expectations.

However the group said it remained mindful of the risk posed by political and economy volatility, which could further impact already low consumer confidence levels.

We believe the market will return to historical long-term growth rates in due course and that as clear market leader we are well-positioned to benefit DFS

While the short-term performance is expected to rely on the consumer backdrop, DFS had a positive long-term outlook.

“We are executing our strategy of transforming our business to lead sofa retailing in the digital age,” the company said.

“We believe the market will return to historical long-term growth rates in due course and that as clear market leader we are well-positioned to benefit, delivering strong levels of cash generation and attractive shareholder returns in the long term.”

Analysts at Jefferies endorsed the company’s strategy, saying the four DFS brands – DFS, Sofology, Swoon and Dwell – are complementary and backed by an “energy from management and the keen desire to share best practice across the brands, leading to improved performance and cost efficiencies”.

Meanwhile the company also announced the appointment of Mike Schmit as chief financial officer with immediate effect.

Mr Schmidt has been serving in the role on an interim basis, having previously been the group’s chief development officer.

Prior to that he worked for 13 years at investment banks including UBS and Citi.

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