Financial Trading Blog

Stock of the day 08/08/2016 – DFS Furniture PLC



Will investors need a sit down following DFS Furniture’s full year trading update on Thursday?


Still a relative baby (it only floated in February 2015) DFS has felt the full force of the market’s turbulent ways in 2016. The early in the year slump saw the stock slide to £2.85 by the middle of February, its worst price since its end of 2015 ascendancy began in October. DFS managed to climb back above £3.20 by the end of March, only to settle into a steady decline that saw it hovering just below £3 on the eve of the Brexit referendum results. Then Britain voted Leave, causing DFS to plunge by nearly 45% in a fortnight to hit an all-time nadir of £1.76. DFS Furniture sits at a current trading price of £2.14 (IT-Finance.com, 08/08/2016).

DFS Furniture PLC Chart August 2016 Spreadex Financial Spread Betting
(Source: IT-Finance.com 08/08/2016)

Back in March DFS posted a fairly impressive set of half year figures, even if investors didn’t react as expected, sending the stock around 6% lower on the day of the results. Pre-tax profits leapt to £16.2 million from a loss of £14.4 million the year before with underlying operating profit surging 12% to £31 million, off the back of a 7% rise in group sales to £461 million. This growth was fuelled by a string of European expansions, with new stores in Spain and Holland, alongside continued popularity with expats in places like France and Portugal.

Yet things have changed quite a bit since that half year report, with DFS now having to deal with the retail sector-shaking Brexit. Analysts are still expecting the company to post a 7% increase in full year sales; however investors are likely to be more interested in what the furniture giant has to say about the current consumer climate and whether it is poised to advantage if any of its smaller rivals suffer in the coming months and years.

DFS Furniture PLC has a consensus rating of ‘Buy’ with an average target price of £3.18.

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