DFS Furniture reports 48.7% profit growth, cuts debt by £38m

DFS Furniture plc, a UK-based upholstered furniture retailer, announced a 48.7% rise in underlying profit before tax to £44.9 million for the 52 weeks ending June 28, 2026. This surpasses the previous year's profit of £30.2 million. Revenue increased by 2.6% to £1,057.5 million from £1,030.3 million, while gross sales grew 2.3% to £1,420.1 million.

The company reached its target gross margin of 58%, increasing by 160 basis points from 56.5% the previous year. Despite a 1.0% year-on-year decline in order intake, DFS's Sofology brand saw a growth of 2.6%. Home furniture, encompassing beds, mattresses, and dining items, experienced a 10.9% increase in orders. Net bank debt dropped by £38 million to £69 million, reducing leverage from 1.4 times to 0.9 times.

The board decided on a final dividend of 2.0p per share, totaling 3.0p for the fiscal year 2026, as opposed to no dividend in the prior year. DFS holds a 40% market share in calendar year 2025, as per Globaldata. During the same period, the company generated free cash flow of £40.3 million. In the first 12 weeks of fiscal year 2027, order intake declined by 2.5% year-on-year.

The decline was attributed to extreme weather affecting footfall and consumer demand in July and August. DFS emphasized disciplined cost management, enhanced gross margins to 58%, and leveraging data and technology to boost earnings and bolster its financial position. Group Chief Executive Officer Tim Stacey stated, "By maintaining disciplined cost management, improving gross margins to 58% and empowering our colleagues through data and technology, we delivered robust earnings growth and significantly strengthened our balance sheet."

The company reiterated its medium-term targets of £1.4 billion in revenue and 8% profit before tax margins. DFS noted that UK upholstery market volumes remain about 20% below pre-pandemic levels.