DFI Raises 2026 Earnings Guidance Floor to $295 Million After 17% Quarterly Growth
Key Facts
DFI Retail Group raised its forecast for underlying profit attributable to shareholders for fiscal 2026 to a range of $295 million to $305 million, from $285 million to $305 million previously, after continuing subsidiaries recorded year-on-year profit growth of 17% in the third quarter. The group said the new guidance is based on expected organic revenue growth of about 3–4% during the year. Over the same period, sales at continuing subsidiaries rose 4% year on year and 2% on a like-for-like basis. The profit margin improved by 40 basis points, according to the company’s disclosure dated October 23. The revision raises the lower end of the annual forecast while leaving the upper end unchanged.
DFI attributed the profit growth to higher profitability in its health and beauty and home furnishings businesses, along with lower selling, general and administrative expenses as a result of ongoing cost-efficiency initiatives. It added that Maxim’s contribution increased, mainly supported by the earlier timing of the Mid-Autumn Festival compared with the previous year. In health and beauty, sales grew 7%, or 5% on a like-for-like basis, and segment profit rose 12% year on year. Hong Kong’s Golden Week holiday sales also increased by more than 10% year on year from October 1 to 7. The group said customer traffic supported an acceleration in like-for-like sales growth at 7-Eleven Singapore to 11% in the third quarter.
In home furnishings, like-for-like sales grew 4% in the third quarter, with increases of 3% in Taiwan and 7% in Hong Kong. Reported sales in Hong Kong rose 10%, driven by a recovery in property-market transactions and contributions from pop-up stores. IKEA Indonesia’s gross profit grew 17%, supported by improved sales and cost controls; this figure does not represent the performance of the home furnishings segment as a whole. The figures follow like-for-like sales growth of 3% at subsidiaries in the first half of the year, while underlying profit from continuing operations rose 44% to $117 million. DFI raised its organic revenue growth forecast in July to 3–4% from 2–3%, and its underlying profit range to $285–305 million from $270–300 million.
The group’s cash position improved during the quarter, with net cash of $128 million at September 30, compared with net debt of $22 million at June 30. Alongside its higher earnings guidance, DFI announced an increase in its target dividend payout ratio for fiscal 2027 to 80%, while keeping its 2026 target at 70%. A DBS report dated October 2, before DFI’s update, maintained its buy recommendation and cut its share-price target to $4.50 from $5. The same report cited an increase in the 2027 dividend payout target from 70% to 80%. The report does not establish that the recommendation or price target was reaffirmed after the third-quarter results announcement.
The transaction involving the licensed Starbucks business entails a reorganisation of interests between DFI and Maxim’s, rather than a standalone cash acquisition: Maxim’s interests in the business will transfer to DFI, while Maxim’s will buy back DFI’s stake in its businesses. The business covers more than 1,100 coffee shops in seven Asian markets, and DFI is set to receive about $340 million in cash, subject to adjustments. Completion depends on the fulfilment of closing conditions, and the group is targeting completion by the end of March 2027. DFI expects the licensed Starbucks business to add $600–650 million to subsidiary revenue between April and December 2027, and about $900 million on a full-year basis in 2028. The group kept its underlying profit forecast for 2028 at $310–350 million, while a DBS analyst said early signs of Starbucks’ operational turnaround may emerge in the second half of 2027.