Healthy order book driving growth at furniture retailer

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Listed Doncaster-based furniture retailer, DFS, says it is on course to achieve FY21 underlying pre-tax profits of at least £105m.

Releasing an update on recent trading through to 6 June 2021, the business also says its fourth quarter to date (10 weeks) total order intake is up 92.1% on FY19, driven by customers waiting for showrooms to reopen post lockdown and increased consumer spending on home categories.

Second half to date (23 weeks), total order intake of is up 14% on FY19.

DFS adds revenues and profits from recent strong order intake will be recognised in FY22 pre-tax profit scenarios of £66m to £96m, which it notes are materially ahead of analyst consensus.

It stresses these positive forecasts are in spite of roughly 21 weeks of showroom closures across lockdowns two and three, sector-wide pressures on supply chains from COVID-19 disruption of factory production, raw materials availability and container shipping delays.

The firm’s update notes: “The investment in our ‘Integrated Retail’ model over the last three years is increasingly enabling us to extend our market leading position, and create sustainable value.

“Our retail estate underpins our clear long-term upholstery market leadership, with our network of destination showrooms creating a distinctive customer experience for well over 80% of market-wide consumers that visit a showroom prior to purchase.

“We believe our online channels match our physical retail leadership, through inspirational and easy-to-transact channels that support in-depth research and generates more upholstery sales than the next four online competitors combined.”

Tim Stacey, DFS group chief executive, said “This performance once again reflects both the underlying resilience of the Group and the tremendous support from our colleagues who have worked with huge dedication and commitment throughout the pandemic. 

“Our aim is to lead sofa retailing in the digital age by building a truly Integrated Retail model that allows us to drive market share gains ahead of the competition. 

“Looking ahead, we will continue to invest in key strategic initiatives such as our digital channels, our showrooms and our Sofa Delivery Company final mile logistics capability, along with new investment in UK manufacturing and capacity and expansion into other home categories.

“Despite short-term supply chain challenges and a macro environment that’s hard to read, we believe the business is well set for growth, to be delivered in both a responsible and sustainable manner. 

“Given our overall financial position and outlook it is our intention to recommend a full year dividend of 7.5p in September.”