Market-wide slowdown in demand for DFS
Household furniture retailer, DFS, says it has seen a slowdown in demand across its markets, as it releases an update on recent trading through to 5 June 2022.
For the third quarter of its financial year – ending on 27 March 2022 – DFS experienced double digit growth in the volume of orders taken across the Group compared to a FY19 pre-pandemic comparative period.
But moving into the fourth quarter, DFS says the UK furniture market has seen a “change in demand patterns” with recent data from Barclaycard suggesting a 2.1% fall in transactions in April relative to pre-pandemic periods.
The Doncaster-headquartered business’s update notes: “We have seen a similar change in order volumes across our Group.
“This reduction in transaction volumes comes despite evidence of the Group maintaining its recent market share gains based on our proprietary data.
“While we have increased our weekly production and delivered revenues progressively over half two, to record levels in the fourth quarter, the ongoing Covid linked supply-chain disruption, combined with lower order intake since April has led to lower levels of production and deliveries relative to our previous expectations.
“We now expect UK & ROI full year revenues of approximately £1,150-1,160m and underlying profit before tax and brand amortisation of £57-£62m, which compares to pre-pandemic FY19 pro forma 52 week revenues of £996.2m and profit before tax of £50.2m.”
DFS says it remains in a strong financial position with significant available headroom under its £215m bank facility.
It expects to close the financial year with an order bank that is elevated by about £30m or 2.5% of annual revenues relative to pre-pandemic levels, which will provide resilience going into the 2023 financial year.
The company notes: “Our trading history shows the Group has gained market share during periods of furniture market decline, and we believe we will remain well-positioned against the market, given our scale, brand strength and our integrated retail strategy.”
