DFS confirms 4% second half sales fall and warns profits will be at low end
DFS has said second half sales fell by 4% in the six months to 29 July and EBITDA profits will be about £82m for the full year.
It had warned in June that it had seen ‘significant declines in store footfall and customer orders across April, May and June,’ which it believes was ‘an industry-wide issue, resulting from the uncertain economic environment and unexpected general election, exacerbated by warm weather in May and June. Our summer sale, however, started satisfactorily in July, consistent with trends we have seen in offline and online sector indicators.’
The 4% drop compared with a 7% first half increase, leading to a 1% rise for the year.
New stores in the coming year include Wednesbury, Rugby and Haverfordwest, together with the refurbishment and relaunch of the Croydon branch. It also plans to open a further store smaller format store.
A further five Dwell and five Sofa Workshop branches will be opened within DFS stores in the next six months as it completes its customer distribution centre conversion programme.
‘While the UK furniture market is currently very challenging with the outlook still uncertain, we remain focused on our growth strategy to deliver substantial long-term returns for our shareholders. Although revenue growth is likely to be harder to achieve in the short term than in the recent past, we have identified opportunities to drive operating efficiencies and product margin growth. We intend to maintain our plans for growth investment, and are confident that this will allow us to continue to outperform the market over the longer term. DFS has historically capitalised on adverse market conditions to build our position in the UK market for living room furniture, leveraging our fundamental strengths in store sales intensities, scale of operations, flexible cost base and vertically integrated business model. The board therefore continues to believe that the group enjoys excellent long-term prospects to deliver profitable growth, strong cash generation and attractive shareholder returns as one of the UK's best-known brands, a major British manufacturer and the country's leading retailer of living room furniture.’