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Birmingham Post
Birmingham Post
Business
Jon Robinson

Sofology sales near £150m as profits slashed at owner DFS

Sales neared £150m at Sofology during the first half of its financial year, new figures have revealed.

Accounts for parent company DFS have confirmed the brand's revenue totalled £148.4m for the six months to December 25, 2022.

The figure is a 2.5% rise on the same period in 2021 and over 6% higher than during the same time in 2019.

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Its half-year gross profits also totalled £61.3m, up from £55.8m.

Parent company DFS, which bought the brand in 2017, reported a revenue of £544.5m from continuing operations, down from £556.5m.

Its reported pre-tax profits were also cut from £22.8m to £6.8m.

During its last full financial year, Sofology's sales jumped past the £300m mark.

Sofology was founded in Clayton-le-Moors, Lancashire, in 1974 and is now headquartered in Golborne.

Group chief executive Tim Stacey said: "I'm pleased to report that the group has extended its long track record of achieving market share gains in a challenging market to what are now record levels. We expect our profit for the year to be between £30m-£35m in line with external expectations.

"The share gains have gone some way to alleviating the impact of the weaker market we have observed in 2022 overall. Those gains built throughout the period with the group delivering strong order intake growth in the second quarter. The order intake momentum has continued through the important winter sale period.

"Profit margins have reduced over the last year due to a combination of significant cost increases and our commercial strategy to ensure that we continued to offer great value for customers in an environment where consumer discretionary spend was under pressure.

"We have however improved our gross margins in the first half of this year from H2 of FY22 and further still in the second half to date through product innovation and selected retail price increases. Cost headwinds are reducing and in some cases reversing and we expect our upward gross margin trajectory to continue as we execute our margin build back plan.

"At our capital markets day in March 2022 we set out our ambitions to grow revenues to £1.4bn and operate at an 8%+ PBT margin generating post tax free cash flows of 75%+. We continue to target that level of financial performance and have solid plans in place to deliver this.

"Our disciplined approach to investment, data led innovation, entrepreneurial culture, scale advantages and strong operational execution will support a continuation of our long term trend of market share growth."

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