DFS: leading UK sofa, bed, chairs, and furniture retailer warns of Budget-driven price rises in 2025 - news

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Rising costs and economic challenges are continuing to shape 2025 for retailers 🛋️
  • DFS expects up to £17m profit for H2 2024, nearly double last year
  • Increased sales and cost-cutting measures drove profit growth despite inflation
  • But tax hikes, including NICs and minimum wage increases, will impact expenses in 2025
  • DFS also anticipates subdued market demand amid broader UK economic challenges

A leading UK furniture retailer has warned of rising costs due to the recent Budget and predicted sluggish demand for its sofas as 2025 approaches.

DFS anticipates higher costs this year, partly driven by tax increases introduced in the October Budget. These include higher employer national insurance contributions (NICs) and a minimum wage hike announced by Chancellor Rachel Reeves.

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The NICs increase is intended to fund public services like the NHS, while the rise in minimum wage will boost pay for workers.

Both measures have prompted warnings from businesses about their impact on operating costs and, ultimately, consumer prices.

Last year, over 80 retailers signed an open letter to the Chancellor cautioning that the measures would make price hikes “a certainty” for many businesses.

(Photo: Tim P. Whitby/Getty Images for DFS)(Photo: Tim P. Whitby/Getty Images for DFS)
(Photo: Tim P. Whitby/Getty Images for DFS) | Tim P. Whitby/Getty Images for DFS

But while warning of rising costs, DFS also reported increased profits, saying it expects profits for the six months ending December 29 to reach up to £17 million, nearly doubling the £9 million recorded during the same period last year.

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DFS said it enjoyed increasing sales with its order intake rising 10% compared to the same period the year before.

It said trading is “in line with our expectations” at the start of its key winter sales period, but that there was a “less positive market outlook” for 2025.

Part of the reason for the rise in profit was that DFS cut its costs during the period in a bid to offset cost inflation.

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The company said on Friday (January 17) that it has a “cautious view” on market demand in the first half of 2025 based on economic performance in the UK.

Chief executive Tim Stacey said the market for DFS’s products “remains relatively subdued”.

But he added: “We remain focused on executing our plan, and are cautiously optimistic despite the increased inflationary pressures and less positive market outlook for 2025.”

What do you think about DFS’s outlook and the impact of rising costs on businesses and consumers? Have your say in the comments section.

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