Upholstered furniture retailer DFS has reported record market share gain and is in the strongest position it “has ever been”.

According to its latest trading update for the 52-week period to 25 June 2023, full year 2023 market share increased to 38%, with gross sales growing by 15% compared to the comparative pre pandemic period (FY19), while down 4% year-on-year.

Underlying profit before tax and brand amortisation for FY23 is in line with previous guidance at slightly above £30m despite the market being “significantly worse than expected”.

“The well-publicised global macro-economic challenges impacted overall market volumes, which were down c.15-20% year-on-year,” DFS said.

Gross margin rate continued to improve, supported by freight costs returning to pre-pandemic levels and effective cost control, while adding that it expects to continue to outperform a declining market in FY24 and grow market share, delivering low single digit £m profit growth.

“Trading at the start of the year has been consistent with the Board’s expectations. We currently expect market volumes to decline by mid-single digits for the full year, however, the economic outlook remains uncertain,” DFS said.

“To that end the business has been prudent in its planning, is taking actions to maximise operating cashflow through continuous margin improvement, delivering cost savings and reducing capital expenditure. Despite the ongoing pressure on market volumes, we expect underlying profit in FY24 to be slightly above FY23 levels, supported by the Group’s leading brands, scale and well invested integrated retail proposition.

“When the market recovers, given our increased market share, the operating leverage within the business and our negative working capital cycle, we are well positioned and remain confident in delivering our long-term targets of £1.4bn of revenue, an 8% profit before tax margin and 75% post tax free cash conversion driving strong returns for our shareholders.”

Tim Stacey, Group Chief Executive, commented: “I would like to take this opportunity to thank every one of our colleagues and partners for their commitment, hard work and dedication as we trade through the increasingly challenging market conditions.

“We are in the strongest position we have ever been as a Group in terms of market share, and when the market recovers, we will be well placed to deliver our strategy and grow our earnings and cash flows towards our longer term plan.”