Posted By Global Banking and Finance Review
Posted on January 24, 2025
(Reuters) -DFS Furniture said on Friday that it expects its second-half profit growth for fiscal 2025 to be lower than the first half while maintaining a cautious outlook, sending the British retailer's shares down almost 3% in morning trade.
DFS estimates its first-half profits to have surged as much as 95%, partly due to gains in market share from disruptions at a competitor.
However, the Doncaster-based company anticipates these gains to partially reverse in the second half on rising operating costs resulting from the measures implemented in the UK October 2024 budget.
The budget introduced hikes in employer social security contributions and minimum wages, which are expected to weigh down the furniture retailer's growth in the latter part of the fiscal year.
"We are cautiously optimistic despite the increased inflationary pressures and less positive market outlook for 2025," CEO Tim Stacey said in a statement.
DFS said that it still expects its full-year profit to grow in line with company-compiled analysts' consensus of 22 million pounds ($26.82 million).
The furniture retailer expects profit before tax and brand amortisation for the first half to be between 16 million and 17 million pounds, compared with 8.7 million pounds a year ago.
"While H1 had no 'tailwinds' given the market was down 5%, certain factors that helped DFS' outperformance may not recur in H2," analysts at Peel Hunt said.
($1 = 0.8201 pounds)
(Reporting by Raechel Thankam Job; Editing by Sumana Nandy and Vijay Kishore)
