DFS Furniture PLC cautioned on weaker sofa demand and increased costs due to higher national insurance contributions for employers in the UK.
The Doncaster, England-based furniture retailer expects to report adjusted underlying pretax profit of £16 million to £17 million in the first financial half ended December 29, up sharply from £8.7 million a year prior.
The company highlighted its cautious view on market demand in the second half due to the UK’s economic performance after the budget announced by Chancellor Rachel Reeves last year.
Further, it noted higher operational costs due to an increase in national insurance contributions for employers, as well as a higher national living wage and higher than expected interest rates as the company invests in future growth.
DFS shares fell 2.9% to 134.00 pence each on Friday morning in London.
Chief Executive Officer Tim Stacey said: ‘While the market remains relatively subdued, we are continuing to deliver on our self-help initiatives having strengthened our position as the clear market leader, improved our gross margin and reduced our operating costs, all of which have helped us to deliver year-on-year profit growth.’
He added: ‘We remain focused on executing our plan, and are cautiously optimistic despite the increased inflationary pressures and less positive market outlook for 2025. Looking forward, we are confident that the group is well positioned to drive attractive returns for shareholders as the market recovers and we remain focused on delivering our 8% pretax profit medium-term target.’
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