DFS delivers ‘resilient’ trading as online continues to grow

DFS Furniture plc, retailer of living room and upholstered furniture, has announced an increase in trading with online growing by almost 80%.

According to its latest trading update for the first 24 weeks of the financial year to date, ending 13 December 2020, DFS said gross sales have increased by 19% against the comparable period, despite some showrooms being closed due to Government guidelines.

Online sales increased 76% against the same period. This performance primarily reflects strong order intake growth during the first quarter and has been achieved despite ongoing disruption at The Port of Felixstowe and raw materials supply issues relating principally to foam availability in Europe.

The Group continues to perform resiliently, with Q2 order intake over the first 11 weeks down approximately 5% year-on-year despite the impact of extensive showroom closures in the period.

DFS said its expected full year financial out-turn is underpinned by revenue growth in the financial year to date and the current strong order bank position, which is currently approximately £200m higher year-on-year on a revenue basis.

Therefore, subject to the extent of enforced showroom closures and based upon cautious order intake assumptions of -15% for the second half of the financial year, it expects that full year Profit Before Tax and Brand Amortisation would be within the upper half of the current market consensus range. 

As manufacturing operations, (both internal and those of certain suppliers) are running close to capacity, port delays appear likely to persist, and lead times are above average, the benefit of any second half order intake outperformance may shift increasingly to H1 FY22.

“While short term macro-economic trends are uncertain, we remain focused on accelerating our strategy to lead sofa retailing in the digital age”, DFS said. “We continue to roll-out new initiatives to further extend our clear market-leading online proposition in the sector.

“Evidence suggests that showrooms remain at the heart of the sofa customer journey, however, and we believe our omnichannel approach leaves us well-positioned to maintain our trend of market share gain that is extending our leadership. Although our financial performance will never be immune to the short term market environment, we believe our cash generation across the cycle and our overall growth prospects will drive attractive long-term financial returns for our shareholders.” 

Tim Stacey, Group Chief Executive, added: “I want to thank every colleague in our Group for their resilience, spirit and determination to overcome the many and varied operational challenges that we have faced since reopening our business after the first lockdown.

“We are working all hours focusing on what we can control to look after our people and our customers. I want to thank our customers for their patience given the ongoing disruption to our deliveries due to port congestion and raw material shortages, as well as apologise to those that have experienced delays.

“While the current environment is clearly unpredictable, our business model is resilient and we are well set for medium term growth.”