Sofa retailer DFS is sitting pretty despite the recession Opening a shop in a sector that has been hit harder than most, in a country whose economy is on its knees, might appear foolish, but Mr Filby said: "An ailing economy still has plenty of spend - it's just that it's fallen in percentage terms from the peak spend. We have a lot of confidence it's going to be a great success. The Doncaster-based retailer has confounded its critics since it was taken private in a £500m deal in 2010 by Advent, the private equity group. But unlike many private equity-owned retailers, DFS has managed to cope with downturn and survive in relatively good shape, though profits have been hit. In the six months to the end of January sales fell 10pc to £297m, while operating profits fell 31pc to £28.3m. The profit fall has not come, however, from the shop cutting prices to attract recession-hit consumers, but from the fall in sales. There's no margin squeeze. Our model is like a lot of shed retailers, it's down to sales intensity," said Mr Filby, explaining how the business is highly operationally geared. Its share of the upholstered furniture market - a market which is shrinking - has climbed over the last year and stands at about 25pc. This year, the company hopes to hold or even improve its profit margins by manufacturing more of its furniture in Britain - another counter-intuitive move in the downturn, but one that makes sense in the face of increasingly high transport costs from China. It owns three factories in the UK and has created a second shift at two of the three factories. It's about sweating the assets, creating more jobs in the UK. And we are currently talking to the third factory," Mr Filby said. This means that the factories are working 16-hour days, rather than eight hours, and DFS is now making about a third of all of its products in Britain, up from about a fifth when it went private. Its other surprising move is a subtle but definite shift upmarket, replacing its shouty advertising which focused on "double the discount at DFS" with a softer "making everyday more comfortable" slogan. How it positions itself is crucial, because DFS is one the country's biggest advertisers. Its £90m advertising spend in 2010 was the most of any retailer, excepting Tesco and Asda. Mr Filby admits that many potential customers, especially older ones, were put off by the advertising. "We are looking to widen our appeal," he adds. The change in tone is also being reflected in the products it stocks. DFS is famous for its leather, reclining sofas. Good value and practical but not always that stylish. It has now teamed up with Country Living magazine, the distinctly middle-class publication, which has designed and put its name to a range of sofas and armchairs being sold at DFS. The St Ives and Loch Leven designs cost up to £1,600. Not all analysts are convinced that the way to gain more customers during a consumer squeeze is to go upmarket. Matt Piner, at retail consultancy Conlumino, said: "It's a long road to make that transition. There is an opportunity to move up to the middle market as it is not as crowded as, say, in the clothing market. But it needs to be both about quality and price and the whole approach of how it sells. The company is still very much weighted to out-of-town retail parks. Mr Filby says that even in a downturn consumers are prepared to buy a large piece of furniture - echoing how people are splashing out on expensive ready meals but not going to restaurants. Look at the housing market, which is pretty moribund. In the absence of moving house, this is the alternative. You start at the heart of the home, and it's a purchase often driven by the woman of the house. It is a way of giving a whole revamp to the home. Definitely talking to our customers, this is one of the strengths of our market.