Market slowdown hits performance at DFS

Furniture retailer DFS says it has coped with “unprecedented” Covid-related supply chain problems which particularly impacted its operational and financial performance in the first half of the year.

The Doncaster-headquartered group has today published its its preliminary results for the 52 weeks ended 26 June 2022, which include a rise in revenue from continuing operations to £1,149.8m (FY21: £1,060.2m).

The business also recorded underlying pre-tax profits from continuing operations excluding brand amortisation of £60.3m (FY21: £109.2m). Reported profit before tax was £58.5 (FY21: £102.6m).

Tim Stacey, group chief executive officer, said: “This has been the most operationally challenging year that we can remember with industry-wide Covid-related supply chain issues, double digit cost inflation on raw materials and ongoing colleague absence and skill shortages.

“From the fourth quarter of the year, we saw a reduction in the volume of orders, which we believe is consistent with the overall furniture retail market, although our elevated order bank will provide some resilience as we enter our 2023 financial year.

“In previous challenging environments DFS has performed resiliently and strengthened its market position, by leveraging its fundamental strengths in brand equity, manufacturer access, store sales densities, scale of operations and flexible cost base.

“In the face of the current slowdown in the market, I am confident we will emerge stronger.”

DFS says the double-digit industry-wide inflationary cost pressures have been carefully absorbed into its product range pricing.

The group launched seven new Sofology brand showrooms in FY22 with two further openings planned in FY23, driving additional upholstery market share gain.

And a major DFS store transformation programme has now been rolled out across 47 stores, with the refitted stores showing enhanced sales growth and an average payback period of under 24 months.

DFS’s report adds: “We have been reassured to date by consumers’ relative tolerance of any necessary price increases to offset inflation and the revenue benefit of the sustained c.3% points of market share we have captured since FY19.”