Preliminary Results

D.F.S. Furniture Company PLC
12 October 2000



                           DFS FURNITURE COMPANY plc
            PRELIMINARY RESULTS FOR THE 52 WEEKS ENDED 29 JULY 2000
                                       
          'I am delighted to report an all-time record year for DFS'

*  Record profit before tax £46.1 million    up 79%
*  Earnings per share 30.2p                  up 82%
*  Turnover £357.3 million                   up 21%
*  Dividend per share 18.6p                  up 25%
*  Record special dividend per share 20.0p

'Our success has been driven by the improvement and diversification of our
product range, the growing impact of DFS as the brand of first choice and our
commanding position as market leader. The doubling of our own manufacturing
capacity has also made a contribution to our ability to improve margins while
offering even better value and service to our customers.

Like-for-like sales in the current year to date are stronger than the
comparable period in 1999 with order intake also running ahead of our budgets.
This encouraging start underpins our expectation of further real sales growth
through our existing stores, complemented by the planned opening of six new
stores.

Our balance sheet remains very strong, reflecting the powerful cash generating
capability of the business. We had no debt at the year end and total cash
balances of £99.6 million. Our growth is planned, organic and healthy and with
DFS stronger, bigger and fitter than ever, future prospects are bright as our
dominance in the UK continues to increase.'

Graham Kirkham, Executive Chairman

Enquiries

DFS Furniture Company plc                              Hudson Sandler
Graham Kirkham, Executive Chairman                     Keith Hann
Jon Massey, Chief Operating Officer                    Justin Strong
Ian Bowness, Finance Director
Tel: [phone] (on 12 October 2000)                Tel: [phone]


                             CHAIRMAN'S STATEMENT
I am delighted to report an all-time record year for DFS, with pre-tax profits
growing by 79.3% to £46.1 million. A remarkable performance taken in the
context of an overshopped market place and an environment that has seen the
collapse of a number of our competitors. This was achieved without the benefit
of a single new store opening during the year. Our success has been driven by
the improvement and diversification of our product range, the growing impact
of DFS as the brand of first choice and our commanding position as market
leader.  The doubling of our own manufacturing capacity has also made a
contribution to our ability to improve margins while offering even better
value and service to our customers.

RESULTS
The positive trends reported in the first half continued throughout the year.
Total sales grew by 20.9% to £357.3 million, including a like-for-like sales
increase of 18.9% from our core of comparable stores. Pricing initiatives to
improve our competitiveness meant that our average order value was 14.6% lower
than in the previous year (individual sales transactions grew by more than one
third on a like-for-like basis). Our operating margin improved substantially
to 12.5%, compared with 8.3% in the prior year, and operating profit grew by
83.1% to £44.8 million.

After increased interest receivable of £1.3 million (1999: £1.2 million),
profit before taxation was up 79.3% at £46.1 million - the best result ever in
the 31 year history of DFS. Earnings per share grew by 81.9% to 30.2 pence.

FINANCES
Our balance sheet remains very strong, reflecting the powerful cash generating
capability of the business. We had no debt at the year end and total cash
balances of £99.6 million (1999: £62.6 million), comprising free cash of £44.1
million (1999: £20.0 million) and a further £55.5 million (1999: £42.6
million) associated with the case of Primback Ltd, pending its final
resolution by the European Court.

DIVIDEND
The Board recommends a final dividend of 13.1 pence per share (1999: 10.5
pence), an increase of 24.8%. Together with the increased interim dividend of
5.5 pence paid in June, this makes a total dividend for the year of 18.6 pence
(1999: 14.9 pence), also an increase of 24.8%. We remain committed to a
progressive dividend policy for the future, providing shareholders with
increases in their income that broadly reflect the growth in earnings per
share over the medium term.

SPECIAL DIVIDEND
In the light of our exceptionally strong cash generation during the year, the
Board has once again reviewed the balance sheet and concluded that our free
cash position substantially exceeds the current requirements of the business.
We have always been committed to ensuring that shareholders derive full value
from any such surplus and therefore have great pleasure in declaring a special
(second interim) dividend of 20.0 pence per share. At £20.7 million this is
the largest special dividend ever paid by DFS and will bring the total of cash
returned to shareholders since our flotation at the end of  1993 to £144.0
million.  We retain ample funds to pursue our planned expansion of the
business, including the flexibility to take advantage of suitable freehold
opportunities.

STORES
No new stores opened during the year and five established stores were
completely refurbished: Kings Lynn, Grantham, Bradford, Coventry and
Shrewsbury.

Since the beginning of the current year we have opened a new leasehold store
in Paisley, within the huge Glasgow conurbation, thereby taking DFS into the
lucrative Scottish market for the first time. This new store began trading in
September with order intake to date exceeding our expectations.  Further
openings in Scotland will follow with our leasehold store in Edinburgh planned
to open towards the end of the first half. Our freehold store in Swansea will
also open around this time and leasehold store openings are scheduled for the
second half in Liverpool, Romford and Taunton, making a total of six new
stores by the end of the current year.

Further new store developments are firmly programmed for the next two years,
including our first store in Northern Ireland at Belfast. The opening of our
two Scottish stores ensures that DFS is represented close to most of the major
population centres in the UK, making our national advertising evermore cost-
effective.

PRODUCTS
In the past we have changed approximately 40% of our product range each year
to ensure that we keep pace with changing fashions in home design. Last year,
however, we sharply increased the pace of innovation, completely renewing over
60% of our range. The current breadth, depth and diversity of our products
will ensure our continuing appeal to all ages and all socio-demographic
groups.

DFS BRAND, MARKETING AND E-COMMERCE
The change of name of our five Northern Upholstery stores to DFS will be
completed in November. This will allow us to push further and faster promoting
the real brand values of DFS. During the year greater emphasis was placed on
projecting DFS as a brand rather than solely concentrating on promotional
offers.  The ability to dominate our marketplace with a consistent brand
communication programme will ensure we remain the store of first choice for an
ever-growing number of customers.

Our unique combination of choice, quality, reliability and value for money has
been underlined by a new, fast-moving and contemporary style of advertising,
highlighting that DFS is exclusive not expensive.  Our established media
advertising techniques have been successfully complemented by our new website
at www.dfs.co.uk launched in April 2000.  This has exceeded all our
expectations and is already hosting around 10,000 user visits every week,
enabling customers to browse a wider range of products than we can advertise
on TV or in print. The enthusiastic initial response of consumers underscores
our belief in the potential of this medium to complement our established
retail business through the development of an interactive sales capability in
the medium term.

MANUFACTURING
The acquisition of the Lincoln House factory in June 1999 has enabled us to
double our manufacturing capacity so that we currently produce around 20% of
all the furniture we sell - the highest proportion in our history.  Our
establishment as a major force in UK upholstery manufacturing has strengthened
our buying ability and given us many important advantages including direct
control of quality and delivery lead times and increased flexibility in the
development of new products to keep pace with fashion trends. We have achieved
substantial improvements in productivity and profitability through our
investment in refitting and re-equipment of the Lincoln House facility.

SUPPLIERS
Our huge growth in volume and anticipated greater future needs have placed
more pressure, demands and often investment requirements on our suppliers of
both products and services. Our long term relationships have paid off with our
suppliers giving us unstinting support and commitment and I feel it
appropriate to express our hearty appreciation and thanks for all their
efforts and ongoing contribution to our progress.

PEOPLE
Our excellent performance over the last year has been the direct result of a
superb team effort by all who work for DFS. I take great pride in their
willingness to give the total commitment necessary to ensure customer
satisfaction throughout a year which has seen a huge increase in the volumes
we both manufacture and sell. We are seeing real benefits from our past
investment in training and development. We have also achieved efficiencies
from our action to strengthen our management structure through the appointment
of two new Operations Directors, with Keith Baker taking responsibility for
London and the South, and David Payling for Scotland and the North.  In an
uncertain industry climate, which has led to the failure of a number of our
competitors, the security and stability of DFS has given us excellent
opportunities to recruit, train and develop the additional high quality people
we need to sustain our planned expansion.

OUTLOOK
Like-for-like sales in the current year to date are stronger than the
comparable period in 1999 with order intake also running ahead of our budgets.
This encouraging start underpins our expectation of further real sales growth
through our existing stores, complemented by the planned opening of six new
stores.  Margins are continuing to benefit from higher volumes, the increased
cost-effectiveness of advertising and higher manufacturing participation.  All
these factors give me confidence in our ability to achieve further progress
during the year ahead.

Since we floated at the end of 1993, DFS has achieved a 213% sales increase in
a market that we estimate to have grown by 65%.  We have extended our
geographical coverage, broadened our customer appeal and established an
unrivalled reputation for choice, quality, service and value.  The leading
trade journal in our sector recently concluded that DFS is 'the undisputed
king of upholstery retailing' in the UK. As the sector leader, we are strongly
placed to continue the expansion of our store network and to exploit the new
sales opportunities created by the internet. I believe that we have the right
concept, the right retailing skills and, above all, the right people to
deliver sustained long-term growth in profits, earnings and dividends to our
shareholders.  Our growth is planned, organic and healthy and with DFS
stronger, bigger and fitter than ever, future prospects are bright as our
dominance in the UK continues to increase.

Graham Kirkham
Executive Chairman

                         GROUP PROFIT AND LOSS ACCOUNT
           52 WEEKS ENDED 29 JULY 2000 (52 WEEKS ENDED 31 JULY 1999)
                                       

                                    NOTES          2000           1999
                                                   £000           £000

Turnover                                        357,318        295,486

Cost of sales                                  (303,379)      (262,176)
                                           ------------   ------------
Gross profit                                     53,939         33,310

Administrative expenses                          (9,114)        (8,829)
                                           ------------   ------------
Operating profit                                 44,825         24,481

Interest receivable                               1,322          1,259
                                           ------------   ------------
Profit on ordinary activities
 before taxation                                 46,147         25,740

Taxation on profit on ordinary
 activities                                     (14,959)        (8,515)
                                           ------------   ------------
Profit for the financial period                  31,188         17,225

Dividends paid and proposed             1       (39,913)       (25,650)
                                           ------------   ------------
Deficit for the period                           (8,725)        (8,425)
                                           ------------   ------------
Earnings per ordinary share             2         30.2p          16.6p
                                           ------------   ------------
Fully diluted earnings per
 ordinary share                         2         29.0p          16.6p
                                           ============   ============
                                           


All activities were continuing throughout both the current and previous
periods.

There were no recognised gains and losses in either period other than those
reported in the Group profit and loss account.


                              GROUP BALANCE SHEET
                       AS AT 29 JULY 2000 (31 JULY 1999)
                                       

                                    NOTES          2000           1999
                                                   £000           £000

Fixed assets
Tangible assets                                  71,597         67,362
                                           ------------   ------------


Current assets
Stocks                                           11,721         12,498
Debtors: due within one year                      5,411          3,550
Cash at bank and in hand                         99,583         62,599
                                           ------------   ------------
                                                116,715         78,647


Creditors: amounts falling due
 within one year                               (159,651)      (110,061)
                                           ------------   ------------


Net current liabilities                         (42,936)       (31,414)
                                           ------------   ------------


Total assets less current liabilities            28,661         35,948
Provisions for liabilities and charges           (6,740)        (5,302)
                                           ------------   ------------


Net assets                                       21,921         30,646)
                                           ------------   ------------


Capital and reserves
Called up share capital                           5,170          5,170
Share premium account                             2,059          2,059
Revaluation reserve                               4,396          4,537
Capital redemption reserve                           78             78
Profit and loss account                          10,218         18,802
                                           ------------   ------------
Equity shareholders' funds              3        21,921         30,646
                                           ============   ============
                                           
                           GROUP CASH FLOW STATEMENT
           52 WEEKS ENDED 29 JULY 2000 (52 WEEKS ENDED 31 JULY 1999)
                                       

                                          NOTES          2000           1999
                                                         £000           £000

Net cash inflow from operating
 activities                                   4        81,024         48,460

Returns on investments and
 servicing of finance                         5         1,278          1,258

Taxation                                               (9,015)       (12,195)

Capital expenditure                           6        (9,419)       (15,906)
 
Equity dividends paid                                 (26,884)       (14,949)

Financing                                     7             -         (2,619)

                                                 ------------   ------------
Increase in cash in the period                         36,984          4,049
                                                 ------------   ------------




Reconciliation of net cash flow to movement in cash

Increase in cash in the period                         36,984          4,049

Cash at bank and in hand at the beginning
 of the period                                         62,599         58,550
                                                 ------------   ------------
Cash at bank and in hand at the end of
 the period                                            99,583         62,599
                                                 ============   ============
                                           
                             NOTES TO THE ACCOUNTS


1. Dividends paid and proposed                     2000           1999
                                                   £000           £000

Interim dividend paid                             5,687          4,453
Final dividend proposed                          13,546         10,857
Special dividend proposed                        20,680         10,340
                                           ------------   ------------
                                                 39,913         25,650
                                           ------------   ------------


2. Earnings per ordinary share
The calculations of earnings per ordinary share and fully diluted earnings per
ordinary share are based on the profit for the financial period of £31,188,000
(1999: £17,225,000).  The weighted average number of shares used in the
calculation of earnings per ordinary share was 103,401,896 shares in issue
during the period (1999: 103,839,130). The weighted average number of shares
used in the calculation of fully diluted earnings per ordinary share was
107,726,499 shares in issue during the period (1999: 103,839,130).



3. Reconciliation of movements in shareholders' funds             

                                                   2000           1999
                                                   £000           £000

Profit for the financial period                  31,188         17,225
Dividends paid and proposed                     (39,913)       (25,650)
                                           ------------   ------------
Deficit for the period                           (8,725)        (8,425)
Purchase of own shares                                -         (2,619)
                                           ------------   ------------
Net reduction in shareholders' funds             (8,725)       (11,044)
Shareholders' funds at the beginning
 of the period                                   30,646         41,690
                                           ------------   ------------
Shareholders' funds at the end of
 the period                                      21,921         30,646
                                           ------------   ------------

4. Reconciliation of operating profit to net cash inflow
    from operating activities 
                                                   2000           1999
                                                   £000           £000

Operating profit                                 44,825         24,481
Depreciation                                      5,251          4,606
Profit on sale of fixed assets                      (67)          (149)
Decrease / (increase) in stocks                     777           (219)
(Increase) / decrease in debtors                 (1,858)           609
Increase in creditors and provisions             32,096         19,132
                                           ------------   ------------
Net cash inflow from operating activities        81,024         48,460
                                           ------------   ------------

The increase in creditors and provisions includes an amount of £12,814,000
(1999: £10,061,000) associated with the Primback case.




5. Returns on investments and servicing of finance
                                                   2000           1999
                                                   £000           £000

Interest received                                 1,278          1,258
                                           ------------   ------------




6. Capital expenditure                             2000           1999
                                                   £000           £000

Purchase of tangible fixed assets                (9,790)       (16,300)
Sale of fixed assets                                371            394
                                           ------------   ------------
Net cash outflow for capital expenditure         (9,419)       (15,906)
                                           ------------   ------------



7. Financing                                       2000           1999
                                                   £000           £000

Purchase of own shares                                -         (2,619)
                                           ------------    -----------




8.  The financial information set out above does not constitute the Company's
statutory accounts for the periods ended 29 July 2000 or 31 July 1999.
Statutory accounts for 1999 have been delivered to the Registrar of Companies
and those for 2000 will be delivered following the Company's Annual General
Meeting.  The auditors have reported on those accounts.  Their reports were
unqualified and did not contain statements under Sections 237 (2) or (3) of
the Companies Act 1985.




9.  The annual report will be posted to shareholders on or about 1 November
2000 and will be available on request from the Secretary, DFS Furniture
Company plc, Bentley Moor Lane, Adwick-le-Street, Doncaster,
South Yorkshire, DN6 7BD.

                        OPERATING AND FINANCIAL REVIEW
TURNOVER
Over the year as a whole we have made great progress. Sales grew by 20.9% to
£357.3 million, with a 22.9% increase in the first six months followed by a
19.2% increase in the second half. On a like-for-like basis, sales grew by
18.5% in the first half and 19.3% in the second, making an increase of 18.9%
for the full year.

It is our policy to calculate like-for-like sales on a core of comparable
stores, excluding new branches whose performance has been distorted by launch
promotional activity in the current or prior year, together with any other
branches whose trading  profile  has  been affected by our new  store
developments.

The average order value was 14.6% lower than in the previous year, as we
continued to sharpen our competitive position through pricing initiatives.

OPERATING PROFIT
Operating profit increased by 83.1% to £44.8 million, driven by a substantial
improvement in our operating margin to 12.5%, compared with 8.3% in the
previous year. Pre-opening costs associated with the current new store opening
programme meant that the second half operating margin of 12.4% (1999: 8.5%)
was slightly lower than the 12.7% (1999: 8.0%) reported for the first half.

INTEREST RECEIVABLE
Interest receivable of £1.3 million was £0.1 million higher than in the
previous year, with the benefit of increased free cash balances largely offset
by lower average interest rates and the differential in interest rates
associated with the Primback case.

PROFIT BEFORE TAXATION
Profit on ordinary activities before taxation of £46.1 million was 79.3%
higher than in the previous year.

TAXATION
The Group's tax rate for the year was 32.4%, compared with 33.1% in the
previous year.  Our tax charge is expected to remain slightly above the
standard UK corporation tax rate because of the treatment of non-allowable
costs.

EARNINGS PER ORDINARY SHARE
Earnings per ordinary share rose by 81.9% to 30.2 pence. The share buyback
during the first half of the previous financial year meant that the average
number of shares in issue this year was slightly lower at 103.4 million
(1999: 103.8 million).

DIVIDENDS
The recommended final dividend is 13.1 pence per ordinary share, compared with
10.5 pence in the previous year, an increase of 24.8%. Subject to the approval
of the Annual General Meeting, this will be paid on 8 December 2000 to those
shareholders whose names are on the register on 3 November 2000. This follows
the 25.0% increase in the interim dividend to 5.5 pence and makes a total
ordinary dividend increase for the year of 24.8% to 18.6 pence, covered 1.6
times by earnings per share.

SPECIAL DIVIDEND
The special dividend referred to in the Chairman's Statement will be a second
interim dividend of 20.0 pence per share, payable on 14 November 2000 to
shareholders whose names are on the register on 11 October 2000.

CAPITAL EXPENDITURE
Capital expenditure was £9.8 million (1999: £16.3m).  Major items of
expenditure included the refurbishment of five existing stores and the
refitting and re-equipment of the Lincoln House factory acquired in June 1999.

CASH FLOW
Our business is highly cash generative, enabling us to fund our entire
expansion programme from our own resources, including the purchase of store
freeholds. Record operating profits and strong cash controls have resulted in
net cash inflow from operating activities (excluding Primback monies)
increasing to £68.2 million in the year (1999: £38.4 million).

BALANCE SHEET
The Group's balance sheet remains very strong with no borrowings and total
cash balances of £99.6 million at the year end, compared with £62.6 million in
1999.  These balances include £55.5 million (1999: £42.6 million) associated
with the Primback case, which is offset by a corresponding sum shown within
creditors.  Our working capital requirements remain minimal, with stocks
comprising principally store displays, raw materials at the Group's factories
and finished goods awaiting delivery.

OPPORTUNITIES AND RISKS
DFS is the UK's leading specialist retailer of upholstered furniture, selling
over 25,000 individual pieces of furniture each week. We have developed our
unique retail and manufacturing formula over 31 years in business, during
which we have attained market leadership by maintaining a strong specialist
focus and constantly investing in our stores, systems, products, factories and
people. We have made substantial gains in market share, from around 5% at the
time of our flotation in 1993 to some 14% today. DFS achieves local market
share in established stores of around double this figure supporting research
which clearly indicates a capacity for over 100 DFS upholstery stores within
the UK alone.

The finance for all the Group's credit sales is provided through external
financing companies, without recourse to DFS.

We continue to monitor the introduction of the European single currency and
its potential implications for UK retailers. As all our sales are made within
the UK and the majority of our overseas suppliers invoice us in sterling,
exchange rate risk has never been a material issue for the Group and we do not
anticipate any significant short term impact on our operations from the
introduction of the euro.

DFS does not undertake speculative financial transactions and continues to
pursue prudent treasury policies, investing its surplus funds only with top-
rated financial institutions. Insurable risks are centrally monitored and
controlled and are  covered with leading UK and international insurance
companies.  All other aspects of risk management are kept under continuous
review.