Shares round-up: DFS, On the Beach, Everyman Media

Hopes that the worst is over for DFS Furniture (LSE:DFS) helped to cushion the blow of no dividend today, prompting a City firm to reiterate its support for the retailer’s “very cheap” shares.

Peel Hunt believes the bottom-line performance should improve very quickly once sustained sales growth emerges, a revival it believes could happen sooner not later.

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Red Sea supply chain disruption and the cost-of–living crisis left underlying profits 65.7% lower at £10.5 million in today’s annual results, a performance that fuelled the dividend pause following last year’s payment of 3p a share.

But DFS also said that order intake had returned to growth over the past 12 weeks, a welcome trend after the upholstery market declined 20% on its pre-pandemic level.

Its forecast for a gradual market recovery during the current financial year is supported by the recent housing market upturn and growth in real household disposable incomes.

Chief executive Tim Stacey said: “Despite the challenges that the business has seen, we are optimistic for the future and see signs that market growth could soon return.”

He remains confident that DFS will deliver on its medium-term objectives for £1.4 billion revenue, compared with today’s £987 million, at an 8% pre-tax profit margin.

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The group has increased its market share by four percentage points since 2020 and today said it is on track to deliver £50 million of annual savings by the 2026 financial year.

The shares recovered from their initial negative response to this morning’s results to later stand 3.6p higher at 118.6p, which is broadly where the company started the year.

Peel Hunt, which has a price target of 200p, said the shares do not reflect any form of recovery.

The broker added: “Operational gearing could mean material upgrades if like-for-like sales come through, and that could leave even our 200p target price looking conservative.

“For a well-managed, strong market leader, we believe the shares are great value.”

Counterparts at Jefferies left their estimates unchanged following the results, including for a profits recovery to £22 million in the current year. The bank has a 140p target price.

Among other small-caps, On The Beach Group (LSE:OTB) shares failed to brighten despite the company reporting record summer bookings. The 13% peak season increase meant that the value of holidays booked in the financial year to 30 September rose 15% to £1.2 billion. 

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The sales progress follows February's Ryanair agreement, when years of legal wrangling ended with a deal that gave the agency frictionless access to the airline’s seat inventory.

One-off costs related to the Ryanair integration will impact its full-year performance, although today’s £31 million guidance met market expectations. Winter volumes are currently 34% ahead of the prior year, with bookings for summer 2025 “very encouraging”.

Shares eased 2p to 143p but Peel Hunt reiterated a target of 300p following today’s update. It said: “In 2025, management should be able to focus all its time on growing the business.

“Premium, long-haul and – perhaps, in due course – city breaks are all large markets OTB can grow into from a low base.”

On AIM, Everyman Media Group (LSE:EMAN) improved 2p to 58.5p after it overcame the disruption to schedules caused by last year’s actor and writer strikes to grow half-year earnings by 7% to £6.2 million..

The group, which operates 45 cinemas and 155 screens, reported a 22% rise in revenues to £46.9 million as food and beverage spend per head lifted to £10.47 and the paid-for average ticket price increased to £11.76.

New venues are due to open in Cambridge and Stratford, while the company is encouraged by a second-half pipeline of content that includes Joker: Folie à Deux, Gladiator II and Paddington in Peru.