There's no doomsday scenario for DFS, vows Kirkham

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The Independent Online

Lord Kirkham, who is attempting to acquire DFS for £445m, yesterday denied he was painting a "doomsday scenario" for the sofa retailer despite warning full-year profits would miss City expectations.

Lord Kirkham, who is attempting to acquire DFS for £445m, yesterday denied he was painting a "doomsday scenario" for the sofa retailer despite warning full-year profits would miss City expectations.

The Tory party donor, who wants to pay 415p a share to buy back the company he founded 35 years ago, insisted he was as "positive and upbeat as ever" about DFS's future.

His upbeat comments contrasted with the bleak tone of the interim results statement. As executive chairman, he warned growing competition in the sofa sector; an inability to retain staff; higher marketing costs; the "cannibalisation" effect of new stores; and the prospect of interest rate rises would all hold back DFS's growth prospects.

After 11 years of aggressive expansion, the company said it was planning to "pause to consolidate" its 67-store strong estate. This surprised many analysts, who believe the company could open up to 100 stores.

Despite speculation Lord Kirkham was preparing to increase his bid to 435p a share, the company said it had failed to make any headway in talks. Analysts have suggested the group is worth up to 450p a share, although yesterday Lord Kirkham insisted: "I don't want to nick anything." Shares in DFS fell 5.5p but at 434.5p remain well above Lord Kirkham's original offer.

Lord Kirkham, whose family has a 10 per cent stake, will today embark on a series of one-to-one meetings with investors in an attempt to persuade them that the business would fare better in private hands.

DFS said yesterday that like-for-like sales during its first half fell by 2.9 per cent, after it received fewer orders for new sofas during its crucial winter sale than the previous year - for the first time in the 11 years it has been listed. Its pre-tax profit for the six months to the end of January fell 6.3 per cent to £24.5m, excluding a £9.7m gain from the sale of its site in New Malden. It held its interim dividend at 7p per share.

Lord Kirkham lashed out at suggestions DFS was struggling. "It's unmitigated bollocks to suggest DFS is a dog," he said, adding: "If DFS was a dog, it would be a Crufts champion."

DFS's rival Courts, meanwhile, also warned yesterday that worsening trade and a string of one-off costs meant it was expecting to post a £24m loss for the year to March 2004. Its shares fell 21.5p to 271.5p.

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