Home movers buoyed by cheap credit boost sales and profits at recently re-listed sofa maker DFS Furniture
Shares in sofa maker DFS Furniture rose by 3 per cent today after it reported rising sales and profits on the back of a buoyant housing market, cheap credit and thanks to new store openings.
The group, which floated again on the stock market last March after a ten year absence, said total sales soared 7 per cent in the year to the end of July, helping underlying profit rise by 8.4 per cent to £89.2million.
DFS also said it was on track with its expansion plans, having opened six new stores in the UK and Ireland in the financial year, which were already ‘operationally profitable’.
By midday, DFS shares were 1.7 per cent, or 5.25p higher at 314p.
Comfortable news: Recently re-listed DFS Furniture hailed soaring annual sales and profits
The Doncaster-based business - which has more than 100 stores in the UK, Ireland and the Netherlands - said customers buying furniture with its interest free credit offers helped it boost revenues.
Sales growth slowed slightly in the final six months as it came up against strong comparatives from a year earlier, but there was still strong demand for ‘big ticket’ items, the group said. Online sales rose 17 per cent over the year, it added.
‘The financial year saw a continuation of the favourable upholstery sector conditions experienced since the second half of our 2014 fiscal year, evidenced by the key macroeconomic indicators of consumer confidence, housing market activity and consumer credit availability,’ DFS chairman Richard Baker said.
DFS returned to the London stock market in March this year after a ten-year absence when the group's founder, Lord Kirkham took it back into its hands in 2004.
The group’s share price has risen by more than a fifth since floating, despite initially failing to catch the imagination of investors.
The stock was priced at 255p a share when it floated - the bottom end of an indicated price range of 245p to 310p - valuing the company at £543million.
Looking to the future, Mr Baker said there were ‘still substantial further potential opportunities’ as it continues to expand and the market remains around 20 per cent below the peak hit before the financial crisis.
The group announced it was targeting the expat community in Spain as it acquired a local business and rebranded it DFS Spain.
‘Although we have no plans at present to grow our Spain showroom base, we see this acquisition as a positive step to unlock the potential of our strong brand recognition and online web offer with up to 800,000 expatriates from the UK currently living in Spain,’ DFS said.
DFS also announced an unexpected interim dividend, in addition to a final pay-out, rewarding shareholders with 9.3p a share in total.
Matthew Taylor, analyst at Numis, said: ‘The outlook statement reads positively and there is an unexpected interim dividend, in addition to the final pay-out, which we think can be read as a statement of intent in terms of future shareholder payments.’
Analysts at Jefferies said the results ‘reassure DFS can deliver growth on several fronts’.
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