DFS Furniture (LSE:DFS), the UK's largest retailer of living room and upholstered furniture, reported underlying pre-tax profit before brand amortisation of £44.9m for the 52 weeks to 28 June, up 48.7% from £30.2m a year earlier.
The result met upgraded guidance issued during the year, despite a subdued UK furniture market.
Gross margin expanded 160 basis points to 58.1%, hitting the group's strategic 58% target, while Sofology outperformed the wider market with order intake growth of 2.6%, helped by its higher-income customer base and range refreshes.
Free cash flow of £40.3m cut net bank debt by £38m to £69m, reducing leverage from 1.4 times to 0.9 times earnings. The board proposed a final dividend of 2.0p per share, taking the total FY26 payout to 3.0p, marking the resumption of dividend payments.
"Our performance in FY26 demonstrates the fundamental strength, agility and resilience of the DFS Group," said chief executive Tim Stacey.
Order intake in the first twelve weeks of FY27 is down 2.5% year-on-year, in line with expectations, though extreme weather hit footfall and demand over July and August. DFS said it expects moderate profit growth in FY27, in line with analyst consensus of £48m pre-tax profit, while reiterating medium-term targets of £1.4bn revenue and an 8% profit margin.