DFS Furniture reassures over profits, dividend and competitive strengths

Updating the market following mixed reports from its rivals, DFS Furniture posted solid half-year revenue growth and said its expectations for the full year profits remained unchanged.

In a trading update covering the 26 weeks to 28 January, the company said gross sales rose 7% and that it was working to offset the impact on product profit margins from the weakness of the pound, with good cash generation continuing.

DFS's vertical integrated UK manufacturing capability is an important competitive advantage against its rivals, it pointed out, and free cashflow had remained strong.

Details of a promised special dividend will be given with half year results announcement on 30 March, with shareholders due to receive the payout "before the end of July".

After poorly received interim results from homeware retailer Dunelm on Wednesday and more upbeat reports from peers ScS and Carpetright last week, investors were looking for DFS's take on the market.

"We recognise that in 2017 the retailing of furniture in the UK faces an increased risk of a market slowdown given the uncertain outlook for consumer confidence," the company said.

"However, with its resilient operating model we believe the group remains very well positioned to respond to economic headwinds and cost pressures whilst achieving continued growth in its share of the UK retail furniture market."

Independent retail analyst Nick Bubb said after Dunelm’s poorly received interims, DFS was "on a hiding to nothing".

While expectations were unchanged, he said the overall sales growth "was again nothing to write home about".