DFS blames ‘exceptionally low market demand’ for disappointing results

Furniture retailer, DFS, says its revenues dropped 9.3% to £987.1m, with the company warning it has been “heavily impacted” by a decline in market demand and in the second half by disruption to shipping in the Red Sea.

Publishing its preliminary results for the 53 weeks ended 30 June 2024, the Doncaster-headquartered business adds that its total gross sales – which are recognised on delivery of orders to customers – fell by 7.9% year-on-year to £1.3bn.

DFS also made a reported pre-tax loss of £1.7m (FY23 £29.7m pre-tax profit), but notes successful gross margin and operating cost improvements partially mitigated what it describes as “exceptionally low market demand.”

Tim Stacey, group chief executive officer, said: “Despite the challenges the business has seen, we are optimistic for the future and see signs market growth could soon return.

“We expect recent improvements in housing transaction data and strengthening consumer balance sheets to lead to increased upholstery market demand across the FY25 financial year.

“In addition, thanks to the success we have had growing our gross margin and improving our operational efficiency we expect to deliver profits in line with market consensus, weighted to the second half.

It’s clear the upholstery market has a long road to recovery given the 20% decline on pre-pandemic levels that we’ve seen. Despite the challenges we’ve faced, we remain confident the business is well positioned to capitalise on market recovery.”

DFS notes it has made £27.5m worth of efficiencies in the current year through reducing its operating cost base and lowering the cost of goods.

The company says it is on track to deliver at least £50m of targeted annualised savings by FY26.

It states that its closing net bank debt of £168.4m is comfortably within the company’s £250m facility

And DFS says “prudent, temporary” widening of covenants secured this month provides extra headroom in the unforeseen event of a severe market downside scenario.

In an outlook statement, the retailer says it is confident it can deliver its £1.4bn revenue and 8% pre-tax profit medium-term targets as the market recovers.

Close