Revenues fall at sofa retailer
DFS Furniture has announced its revenue has fallen by over a £271m in its preliminary results for the 52 weeks ending 28 June 2020.
The Doncaster-headquartered furniture retailer saw profits fall by £107m and it make a loss before tax of £56.8m as a result of the pause in trading, for the first time in 50 years due to the Covid-19 lockdown earlier this year.
Explaining the fall in revenue, Tim Stacey, group chief executive highlighted that the business only recognises revenue at the point of delivery to customers, so despite strong online trading, the restrictions from March 23 which impacted customer delivers also heavily impacted the the second half of the year’s revenue.
Stacey added: “While the reported decline in profit is undoubtedly disappointing in headline financial terms, a significant proportion of this profit has already been recovered in the current year as we resumed customer deliveries.
“The current year has started very strongly with all showrooms now open and our digital channels continuing to grow. Our year-on-year order intake growth over the last twelve weeks, combined with our previously announced higher opening order book, implies c.£226m of additional revenues will be realised in this financial year. We believe that this growth is due to a combination of pent up demand from lockdown, consumers spending relatively more on their homes and the strength of the DFS and Sofology propositions in particular.”
With the above in mindand with the caveat of no “further lockdown impacts” the Stacey believes that the business will report a strong first half to the financial year but warned that the full year results will be dependent both on the effects of both the pandemic and the impending Brexit on “consumer confidence, the housing market and levels of employment”. As a result he states that cash generation will be a priority as the business looks to build its financial resilience.
To that end the business is on track to make property savings worth £6-8m annually by FY23, having secured £1.4m worth of annual savings since June 2019. Looking into next financial year the business also plans to accelerate the roll out of new Sofology showrooms and has six-10 sites targeted for FY21, having opened three in previous financial year.
Ian Durant, chair of DFS said of the results: “This has been an extraordinary year, unprecedented in the challenges posed by the closure of our showrooms, manufacturing and delivery capabilities for almost three months of our peak spring trading period.
“In these uncertain times we need to be cautious and alert to the unexpected. It is impossible to predict the impact of the political, social and economic developments we are seeing. Notwithstanding these challenges, the Board is confident that the strength and resilience of the business places the Group in a relatively strong position over the long term and well placed to manage these market uncertainties. We remain committed to developing the Group to drive shareholder returns, have a positive impact on our society and continue to provide a rewarding place for our people to work and believe these aspirations are mutually compatible.
Since the start of the new financial year the business has sold premium UK sofa retailer, The Sofa Workshop to luxury furniture business Halo Furnishings for £300,000, announcing the deal in August.