- Uptick in orders continues
- Trading in line with expectations
- New CFO John Fallon named
On the day the ONS (Office for National Statistics) announced disappointing retail sales for October as Budget uncertainty sapped spending, DFS Furniture (DFS) defied the doom and gloom with news of robust orders growth into the new financial year.
The reassuring update will come as a relief to shareholders, who might have feared another profit warning from the sofa specialist, which lurched into loss for the year to June 2024 and axed the final dividend after a year marred by weak spending on big ticket items and Red Sea supply disruption.
Even so, the market is clearly still worried about UK economic health and how that could squeeze DFS down the line, hence the share price’s stubbornly flat 133p performance on Friday (22 November). Perhaps this will change as the day progresses and investors digest the company’s commitment to ongoing cost-cutting which leaves it on track to meet market expectations.
ROOM FOR IMPROVEMENT
The UK’s clear living room furniture leader, which owns the Sofology and Dwell brands also, explained that the improving trading performance highlighted at the full year results (25 September) has continued into the financial year to June 2025, with orders remaining in growth over the first 20 weeks.
This trend is encouraging for DFS which, albeit before the recent Budget, said it expected a gradual market recovery over the course of the year and to grow profits with tailwinds from the recent housing market recovery and growth in real household disposable income.
NEW CFO HIRE
Following the surprise resignation of CFO (chief financial officer) John Fallon in October, DFS Furniture also announced that Marie Wall will be joining the business as interim CFO on 2 December 2024.
She previously served in senior finance roles at Imperial Brands (IMB), Wolseley and Dixons Carphone and will assume a full role in the New Year.
CEO Tim Stacey said he is ‘very pleased to welcome Marie to our group. She is a strong addition to our leadership team bringing with her a wealth of financial leadership experience, as we pursue our growth strategy.’
EXPERT VIEWS
‘All in, good work all round from DFS as the first half of full year 2025 progresses,’ commented Shore Capital, ‘activity that we believe should support its share price. Keeping its own house in order alongside some further reductions in UK base rates, so potentially supporting consumer confidence, would go some way to further building the group’s earnings, of course, something that is likely to be a talking point for 2025 and beyond, as is the UK Government’s capability to effectively pass planning reform and actually contribute to a notable tick up in housebuilding, from which as market leader, DFS should benefit.’
AJ Bell investment director Russ Mould said DFS has ‘raised hopes it will return to profit in its current financial year as it built on a strong finish to its previous financial period. The company is also continuing to strip out costs and has appointed Marie Wall as interim chief financial officer.’
Mould added: ‘DFS will hope the reduction in interest rates and tentative recovery in the property market continue as these will be key ingredients for future demand.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
