By Raechel Thankam Job
(Reuters) -Britain’s DFS Furniture expects to beat annual profit expectations, assuming no further supply chain disruptions, helped by robust sales and effective cost management, it said on Thursday, sending its shares up over 10%.
The retailer has been tightly managing expenses in a volatile business environment, while grappling with rising costs that have been exacerbated by a government policy to increase employer social security contributions and the minimum wage.
Still, it expects underlying profit before tax and brand amortisation of 25 million to 29 million pounds ($32 million to $38 million) for the year ending June 2025, ahead of analysts’ consensus forecast of 22.7 million pounds in a company poll.
DFS has been streamlining and simplifying its operations, and is targeting 50 million pounds in annualised cost savings by 2026.
Shares in the company rose as much as 12% to 148.5 pence in early trade.
“Our confidence in the group’s capabilities and future potential has never been higher,” CEO Tim Stacey said.
Stacey added the firm was on track to achieve its 1.4-billion-pound revenue target for the full year.
Boosted by a rise in orders and market share gains, underlying profit doubled to 17 million pounds for the six months ended December 29, 2024, from a year earlier.
The results could raise hopes of a long-awaited pick up spending by British consumers as wages rise faster than inflation, following a lengthy cost-of-living squeeze.
However, DFS cautioned that the more-than 11% surge in order intake year-to-date was unlikely to continue.
“We would be surprised if this stellar rate of growth can persist at these levels,… but DFS is hurdling everything put in front of it at the moment” Peel Hunt analysts said in a note.
($1 = 0.7720 pounds)
(Reporting by Raechel Thankam Job. Editing by Rashmi Aich and Mark Potter)
