DFS Furniture PLC (LON:DFS) reported a decline in first half profits and sales but shares jumped as it said it remains confident of delivering modest earnings growth this year.
The furniture retailer said revenues, excluding the acquisition of Sofology in November, dropped 3.5% to £366.6mln in the six months to January 27. Profit before tax plunged 58.1% to £40.4mln.
However, revenues increased 4.3% to £396.1mln when including a £29.6mln contribution from Sofology.
READ: DFS Furniture's first half sales boosted by Sofology acquisition
The group also said recent trading had improved and expects the second half to deliver a “stronger year-on-year revenue trend than the first half”.
"We have seen a strengthening trading performance across the first half of the financial year and through February into March,” said chief executive Ian Filby.
“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."
Shares rose 7.6% to 183p in morning trading.
DFS owns the Sofa Workshop and Dwell Brands. It also has brand partnerships with French Connection and House Beautiful.
In December, the group bought store leases and other assets from collapsed rival Multiyork for £1.2mln. Multiyork fell into administration in late November blaming difficult trading conditions for UK retailers due to economic uncertainty, higher cost inflation and an increase in business rates.
“Whilst rivals fail, the scale and flexibility of DFS is insulating it from the worst of the troubles facing the market," said Neil Wilson, senior market analyst at ETX Capital.
"After the Feb update was a little sparse and may have dented confidence in the stock, it was a marginally rosier picture in today’s half-year results, which are in line with full-year guidance maintained."