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sofa chain dfs The furniture maker said it expects “strong” profit growth in the first half despite a weak market and consumer uncertainty ahead of this month’s Budget.
The group said orders had risen in an “encouraging start” to the first 19 weeks of its financial year, while “self-help” cost-cutting measures were offset by rising inflation and rising staff costs.
Tim Stacey, chief executive of DFS, said: “We have had a strong start to the year as we continue to execute on our strategy.
“Despite the softness in the upholstery market, we have increased order volumes across both of our retail brands – ahead of the market – and made progress in our gross margin and cost base initiatives, positioning us well to deliver strong first half profit growth year on year.”
The firm said it was sticking to its guidance for underlying full-year pre-tax profit of £40.6 million.
It reported underlying pre-tax profit of £30.2 million in the year to June 29.
But the group said it was “taking into account the broader macroeconomic environment and the uncertainty created by the upcoming autumn Budget”.
“While the macroeconomic backdrop remains uncertain in the short term, we will continue to focus on what we can control,” Mr Stacey said.
After cutting an additional £25.5 million in the financial year, due to increased use of technology, DFS reached its target of £50 million in annual cost savings by June – ahead of target.
Following an increase in National Insurance contributions and a minimum wage increase, costs including the wage bill for its staff increased by 2%.
The group is focusing on using its scale, and improving data and technology to help increase efficiency as it also looks to bring about a turnaround after sinking into bottom-line losses in 2023-24.