DFS reinstates dividend, upgrades outlook
DFS reinstated its dividend as the furniture retailer reported strong trading and predicted profit next year would be well ahead of expectations.
The company said it was on track to report annual underlying pretax profit of at least £105m for the year to the end of June compared with a £56.8m loss a year earlier. The guidance is slightly ahead of its published "medium" scenario and is despite supply chain problems, DFS said.
Strong recent trading will be recognised the following year. Pretax profit scenarios of £66m-£96m for that year are "materially ahead" of analysts' average forecast, DFS said.
After scrapping its dividend during the pandemic DFS said its solid cash generation meant it intended to pay a final dividend of 7.5p a share for the year to the end of June.
Shares of DFS rose 13% to a record high of 307p at 09:14 BST. The shares have gained 76% over the past year.
DFS said orders in the fourth quarter to date were up 92% on two years earlier as customers returned to showrooms after lockdown and increased spending on their homes. Many households have been making home improvements after spending more time indoors and with the prospect of working from home.
In the second half to date orders were 14% ahead of the same period in 2019, boosted by online orders more than tripling in the third quarter. Revenue rose 10.4% in the first 49 weeks of the year from two years earlier.
Tim Stacey, DFS's chief executive, said: "Despite short-term supply chain challenges and a macro environment that's hard to read, we believe the business is well set for growth, to be delivered in both a responsible and sustainable manner. Given our overall financial position and outlook it is our intention to recommend a full year dividend of 7.5p in September."