DFS Furniture looks set for a return to the stock market, five years after Lord Kirkham, the retailer’s founder and sole owner, controversially took the company private.
DFS said: “Through our City adviser we are exploring options which may include a possible IPO or third-party investment in the company.”
Alan Jacobs, the former Schroders and Citigroup investment banker who originally floated the DFS company in 1993, is handling the strategic review through Jacobs Capital, his investment and advisory business. It is thought that the company has recently begun the strategic review at the behest of Lord Kirkham.
A potential flotation of the UK’s largest sofa retailer would represent a further sign of life in the retail sector. The likes of Pets At Home, New Look and Matalan have all been linked with potential listings in recent weeks.
DFS has until March to file accounts for the year to July 2009, but it is likely that the company has weathered the storm during the recession.
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The collapse of key rivals MFI and Land of Leather will have boosted the fortunes of the country’s largest retailer of upholstered goods.
The Doncaster-based company, which was founded by Lord Kirkham in 1969, has 77 stores across the country but has not opened a new outlet during the recession.
For the year to July 2008, DFS recorded a 24 per cent fall in pre-tax profits to £35.8 million, down from £46.8 million in the previous year.
Revenue declined more modestly to £594.9 million from £611.1 million in 2007.
The retailer described that year as “the most difficult trading period”, saying its performance was “credible”.
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Lord Kirkham did not pay himself a dividend in 2008 as a result of the downturn. In 2007, he awarded himself a £46 million payout.
Lord Kirkham, a large donor to the Conservative Party, took the company private in September 2004, but faced substantial opposition to the move from disgruntled shareholders, who argued that he was offering an unreasonably low price for the stock.
He paid £507 million for the company after raising his bid to appease the shareholder revolt.
More than 16 million shareholders opposed the takeover at the final vote but he received the backing he needed after profit warnings from Courts and MFI, the company’s key rivals at the time, convinced the majority of investors to accept his offer.