Cushioned, for now: DFS launches special dividend as sales rise

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DFS announced its first special dividend alongside its half-year results on Thursday, as the unexpected resilience of the UK economy since the Brexit vote supported sales at the country’s biggest furniture retailer.

The Doncaster-based group has repeatedly warned of the risks of a market slowdown since last June’s vote, and said again today that it expects to see a “softer market environment” this year.

However, it stressed that “consumer confidence to date has held up well”, and reported a 6.8 per cent rise in revenues in the 26 weeks to January 28, to £379.9m.

It also reported that the weak pound had damaged its profit margins, but said it is negotiating with suppliers to mitigate the impact and expects to make further progress through the rest of the year.

Pre-tax profits were 3.1 per cent higher than the same period last year, at £16.7m, and the company said it is on track to meet expectations for the full year.

DFS increased its interim dividend by 5.7 per cent to 3.7p per share, and announced an additional special dividend of 9.5p per share, and signaled its plans for further such payouts in the future.

The company said it intends “for this return to form a sustainable and recurring increment to the group’s total shareholder return”, provided there is “no significant change in the trading environment”.

Ian Filby, DFS chief executive, said:

I am pleased to report continued good sales growth and strong cash generation reflecting the successful implementation of our proven growth strategy.

The scale of our business, which is larger than our next four UK competitors combined, gives us significant advantages that allow us consistently to offer outstanding value to our customers. We are confident that our size, combined with the flexibility of our cost base and vertically integrated business model means that DFS is particularly well positioned to respond to economic headwinds and cost pressures while continuing to grow our share of the UK retail furniture market.

Photo: PA

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