DFS ‘cautious’ about its full year outlook as it warns of risk to consumer confidence and lead times
Doncaster-based DFS Furniture has reported an underlying sales growth of 10% over the last five months but remains ‘cautious’ about the full year outlook.
The retailer of living room and upholstered furniture, which acquired Sofology for £25m in 2017, today announced a trading update for the five month trading period to 30 December 2018.
On an underlying basis, adjusted to include the acquisition of Sofology on a pro forma basis, the firm said gross sales grew by 10%. It reported gross sales growth of 29% measured against the previous year for the whole group.
DFS said: “While we have achieved a good sales performance, helped by latent demand, we remain cautious around our full-year outlook, and as such our profit expectations for the full year remain unchanged.
“We are mindful of the broader political and economic uncertainty and the further risk this may pose to consumer confidence and lead times for the proportion of our made-to-order products that we source overseas. However, we do expect benefits of previous and ongoing investments in our online activities, our final-mile two-man logistics and the continued integration of Sofology, together with progress being made at Dwell and Sofa Workshop, to help mitigate this challenging market environment.
“It is worth reiterating that the Group has historically capitalised on any adverse trading conditions to build our market position and we continue to believe that our cash generation and long-term growth prospects will drive attractive returns for our shareholders.”
DFS said its performance reflected positive like-for-like order intake growth achieved in each of its DFS, Dwell and Sofa Workshop retail operations and the strength of its online channels which were benefiting from sustained investment and development.
The listed firm added: “Sofology has maintained its solid underlying trading progress with good like-for-like growth and benefits from five successful new store openings since the start of the prior financial year. We believe our trading in this period has seen some benefits from orders placed by consumers who deferred their purchase decisions from the fourth quarter of the prior financial year, given the hot weather at that time.”
The company also said that after over thirty years in retailing, Nicola Bancroft, Chief Financial Officer, had indicated to the Board of Directors her desire to retire from full-time executive roles.
While a succession process is conducted by the Board, Mike Schmidt, currently Chief Development Officer, will become Interim Chief Financial Officer from 1 April 2019. Schmidt has worked with Bancroft at DFS in a senior finance and investor relations role for five years and will complete a smooth handover of responsibilities through to the end of the financial year.
Tim Stacey, Group Chief Executive Officer, said: “On behalf of the Board, I want to thank Nicola for her dedication and service during her time with us. Nicola has been instrumental in our continued growth as the largest sofa retailer in the UK and Ireland. Without her support and contribution, we wouldn’t be the strong and successful business that we are today.”
Nicola Bancroft, Chief Financial Officer, added: “I feel very privileged to have been part of the DFS growth journey over the last six years and to have worked with so many special people.
“I am extremely proud of what we have achieved as a team. The Group is in a very strong position and I am confident it will thrive in the years ahead.”
