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• Order Intake Growth: 10.1% increase in the first half.

• Gross Margin: Increased by 70 basis points to 56.7%.

• Cost-to-Operate Savings: GBP43 million achieved towards a GBP50 million target by FY26.

• Profit Before Tax and Brand Amortization: GBP17 million, nearly doubled year on year.

• Net Bank Debt: Reduced to GBP116.7 million from GBP133.9 million the previous year.

• Leverage Ratio: Reduced from 2.5 times to 1.6 times.

• Free Cash Flow: GBP48.2 million, an increase of GBP37.6 million year on year.

• Revenue Growth: Broadly flat year on year.

• DFS Order Intake: Up 8% year on year.

• Sofology Order Intake: Up 19% year on year.

• Underlying Basic Earnings Per Share: GBP0.53, up year on year.

• Interest-Free Credit Costs: Increased significantly, with potential reductions linked to base rate changes.

• Operating Cost Reduction: GBP5 million year on year.

• Capital Expenditure: Reduced to GBP10.4 million.

• Lease Liabilities: Increased to GBP46.6 million.

• Net Promoter Scores: Record highs post-delivery.

• Warning! GuruFocus has detected 10 Warning Signs with LSE:DFS.

Release Date: March 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• DFS Furniture PLC (LSE:DFS) reported a strong order intake growth of 10.1% in the first half, outperforming a subdued market.

• The company achieved significant cost savings, with GBP43 million of annualized savings from its cost-to-operate program, on track to meet a GBP50 million target by FY26.

• Gross margins improved by 70 basis points year on year, contributing to profit growth.

• DFS Furniture PLC reduced its net bank debt significantly from GBP164.8 million at the end of FY24 to GBP116.7 million, improving leverage from 2.5 times to 1.6 times.

• The Sofology brand saw a remarkable order intake increase of 19% year on year, driven by effective range changes and strong merchandising.

Negative Points

• Despite strong order intake, gross sales were up only 1.4% year on year due to back-weighted order intake, leaving revenue growth broadly flat.

• The company faces increased costs for providing interest-free credit, which have risen significantly over the last few years.

• Freight rates were notably higher, impacting costs, although they are starting to come down.

• The decision not to declare an interim dividend reflects the company's focus on reducing leverage and strengthening the balance sheet.

• The market remains challenging, with volumes still over 20% below pre-pandemic levels, and the company is cautious about the pace of market recovery.

Q & A Highlights

Q: Are you seeing any signs of market recovery, and how did DFS perform relative to Sofology during the current trading period? A: Timothy Stacey, CEO: We haven't seen an increase in market recovery yet, but there are some green shoots. Footfall has increased by 2-3%, and web traffic is also up. DFS has performed well with volume growth, while Sofology's growth is driven by volume due to range transformation and improved value perceptions.