DFS Furniture said it expects to beat annual profit expectations, assuming no further supply chain disruptions, helped by robust sales and effective cost management - sending its shares up over 10% today.
The UK retailer has been tightly managing expenses in a volatile business environment, while grappling with rising costs that have been exacerbated by a government policy to increase employer social security contributions and the minimum wage.
Still, it expects underlying profit before tax and brand amortisation of £25-29m for the year ending June 2025, ahead of analysts' consensus forecast of £22.7m in a company poll.
DFS has been streamlining and simplifying its operations, and is targeting £50m in annualised cost savings by 2026.
Shares in the company rose as much as 12% to 148.5 pence in early trade.
"Our confidence in the group's capabilities and future potential has never been higher," CEO Tim Stacey said.
Stacey added the firm was on track to achieve its £1.4 billion revenue target for the full year.
Boosted by a rise in orders and market share gains, underlying profit doubled to £17m for the six months ended December 29, 2024, from a year earlier.
The results could raise hopes of a long-awaited pick up spending by British consumers as wages rise faster than inflation, following a lengthy cost-of-living squeeze.
However, DFS cautioned that the more-than 11% surge in order intake year-to-date was unlikely to continue.
"We would be surprised if this stellar rate of growth can persist at these levels, but DFS is hurdling everything put in front of it at the moment" Peel Hunt analysts said in a note.
