DFS lowers forecasts based on slowing demand

Ahead of its financial year end on 26th June 2022, DFS says that based on a slowing market-wide demand during its fourth quarter, it has revised its trading projections.

DFS said that recent trading through to 27 March 2022 has seen double double-digit growth in the volume of orders taken across the Group relative to a FY19 pre-pandemic comparative period. This volume growth was achieved despite offsetting significant cost inflation through mitigation and retail price increases

DFS said: “Moving into the fourth quarter the UK furniture market has seen a change in demand patterns with recent data from Barclaycard suggesting a c. 2.1% reduction in transactions in April1 relative to pre-pandemic periods. We have seen a similar change in order volumes across our Group.

“While we have increased our weekly production and delivered revenues progressively over H2, 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.”

“Subject to any variations in the rate of deliveries of the final weeks, we now expect UK and ROI full-year revenues of approximately £1150-1160m, 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.

“We now expect to close the financial year with an order bank that is elevated by some £30m (or 2.5% of annual revenues) relative to pre-pandemic levels, which will provide some resilience going into FY23.”

DFS says that it is difficult to forecast consumer behaviour over the next 12 months, “but should the trends observed in April and May continue across FY23, this would broadly balance the volume benefit from the elevated opening order bank. Following the growth of the group in volume terms relative to pre-pandemic levels, we also believe that we have the opportunity to drive further cost efficiencies from our scale”.

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