During the HY to 26th January, profits at DFS fell from £16.7m to £7m YoY, impacted by non-underlying costs and the impacts of acquired businesses, while revenue before these acquisitions was down 3.5% at £366.5m, reflecting the "expected challenging market environment".
However, thanks to increasing scale and the acquisition of Sofology, group revenue was up +4.3% to £396.1m.
DFS' online traffic and transactions saw double-digit growth, and gross sales of the group's online channels in the last 12 months reached over £160m on a pro-forma basis.
Brand partnerships are working well for DFS – French Connection, House Beautiful and Country Living partnership ranges, plus the Joules launch, have together seen growth of +8.0%.
DFS CEO Ian Filby says: "We have seen a strengthening trading performance across the first half of the financial year and through February into March. We therefore remain confident that, despite the current challenging market conditions, the group will deliver modest growth in EBITDA and generate strong cashflow across this financial year, in line with our expectations."
Fiona Cincotta, a senior market analyst at www.cityindex.co.uk, comments: "The market for big-ticket retail remains tough, and DFS' result was never going to look pretty. Profit has fallen sharply and the company is still warning of challenging conditions ahead.
"But it's not all a complete shambles. DFS has kept its dividend intact and maintained its full-year underlying earnings guidance, keeping downgrade fears at bay, at least for now."