DFS Furniture Reports Sharp Fall in Profit for Fiscal 2023

#DFS Furniture Reports Sharp Fall in Profit for Fiscal 2023

DFS Furniture, a leading U.K. retailer, has reported a significant decline in pretax profit for the fiscal year 2023. The company attributes this decrease to customers refraining from purchasing big-ticket items like furniture, which has resulted in the sector’s value falling below prepandemic levels. In addition to this, DFS Furniture has also decided to reduce its dividend payout.

According to the company’s announcement on Tuesday, pretax profit for the year ending June 25 dropped to £29.7 million ($36.3 million), compared to £58.5 million in the previous fiscal year. Revenue also saw a decline, falling from £1.15 billion to £1.09 billion.

Despite these challenges, DFS Furniture did see an increase in gross margin, rising from 52.7% to 54.4%.

CEO Tim Stacey acknowledged the tough economic climate in which the company currently operates. He expressed confidence in the recovery of the upholstery market; however, he noted the difficulty in predicting the timing and pace of this recovery.

The upholstered furniture market value is currently 15% lower than prepandemic levels, largely due to the challenging macroeconomic environment. DFS Furniture anticipates a further market decline in the mid-single digits for fiscal 2024.

In a positive development, despite the weak economic conditions, the company achieved a record market share of approximately 38%, representing a 2 percentage-point growth compared to the previous year.

Looking ahead, DFS Furniture expects an underlying pretax profit improvement of a low-single digit for fiscal 2024. It projects the profit to range between £30 million and £35 million, thanks to continued market-share gains and margin improvements.

While the company remains confident in the market’s recovery, it recognizes the uncertainty surrounding its speed. The board has recommended a final dividend of 3.0 pence per share, resulting in a total dividend of 4.5 pence for the year. This is lower than the 7.4 pence per share paid out in the previous year.