Doncaster's DFS sees profits cut by half as boss blames 'tough economic climate'
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Pre-tax profit fell by 42% to £29.7m for the year to 25 June, newly released figures show – although the firm still expects profits of between £30m-£35m in the next financial year.
The Carcroft-based sofa chain said revenue from continuing operations fell 5.2 per cent year on year to £1.09 billion for the financial year as it saw the 'weak economic backdrop' hamper customer spending.
DFS revealed in March the drop was mainly due to the cost-of-living squeeze which it said was forcing shoppers to cut back on big-ticket items like sofas, leading the wider market to a 15 to 20 per cent fall in sales volumes this year.
Tim Stacey, group chief executive officer of DFS, said: 'The group is operating in one of the toughest economic climates we have experienced.
'While we are confident the upholstery market will recover, forecasting the specific timing and pace of the recovery is challenging.
'We do, however, expect to generate a modest year on year increase in profit before tax in FY24 despite a relatively weak market in which we expect volumes will continue to decline across the next 12 months.'
Renting a room above a snooker hall in Carcroft, and started making furniture upstairs and retailing it downstairs, forming the firm called Northern Upholstery.
By 1983, Darley Dale–based Direct Furnishing Supplies had become one of Northern Upholstery’s biggest suppliers.
When Direct Furnishing Supplies went bankrupt with debts of £900,000, Kirkham bought it, renaming it DFS and taking on the chain’s stores and staff.
In 1993, DFS was floated on the stock market and valued at £271 million.
In April 2010, DFS was sold to private equity firm Advent International for a reported £500m.
Lord Kirkham, one of Britain’s richest men, also owns a stake in Iceland supermarket as well as Doncaster’s Whitby’s fish and chip restaurant chain and was previously one of the Conservative Party’s biggest donors.