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DFS dips as it predicts “particularly challenging” market for 2019

The slightly gloomy outlook overshadowed a strong set of results for the first six months, with pre-tax profits more than doubling to £14.1mln from £6.2mln
Sofa
The group, however, retained its profit expectations for the full year despite the “soft start” to the second half

DFS Furniture Plc (LON:DFS) shares dipped mid-morning Thursday after the sofa seller forecast a “particularly challenging” market in 2019 amid a slowdown in orders in the second half of its fiscal year.

The group, however, retained its profit expectations for the full year despite the “soft start”.

READ: Berenberg upgrades DFS to ‘buy’ from ‘hold’ after raising its target price for sofa stores firm

The slightly gloomy outlook overshadowed a strong set of results for the six months ended 31 December, with pre-tax profits more than doubling to £14.1mln from £6.2mln while revenues surged 29.1% to £422.3mln.

The interim dividend was maintained at 3.7p per share.

DFS said it had seen like-for-like (LFL) growth across all of its brands in the first half, with group LFLs rising 6.6%.

£1.5mln in synergies had been delivered from the acquisition Sofology, which DFS bought back in 2017 for £25mln. The company is expecting to deliver around £4mln in synergies by the end of the current financial year.

The company also said it was continuing Brexit preparations, identifying consumer confidence and border delays as primary risks to its business.

In a note to clients, analysts at DFS’s broker Peel Hunt said trading for the company was “a touch slower for the industry”, but this was expected given “wider economic and political uncertainty”.

The broker also retained its ‘buy’ rating and 275p price target for the stock, leaving its forecasts unchanged saying there was “no reason to question the strategy or the momentum of the business”.

Shares were down 1.7% at 231.5p.

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