Post-lockdown demand propels DFS to positive year end

DFS has seen order intake in Q4 to 6th June up +92.1% on the comparable period in FY19, and says the performance demonstrates the strength of its ‘integrated retail’ operating model.

DFS says the strong performance was driven by customers waiting for showrooms to reopen post lockdown, and increased consumer spending on home categories. It says it grew market share again by +2%, and is on course to achieve an underlying profit before tax of at least £105m.

Group chief executive Tim Stacey comments: “This performance once again reflects both the underlying resilience of the group and the tremendous support from our colleagues who have worked with huge dedication and commitment throughout the pandemic.  

“Our aim is to lead sofa retailing in the digital age by building a truly integrated retail model that allows us to drive market share gains ahead of the competition. Looking ahead, we will continue to invest in key strategic initiatives such as our digital channels, our showrooms and our Sofa Delivery Company final-mile logistics capability, along with new investment in UK manufacturing and capacity and expansion into other home categories.

“Despite short-term supply chain challenges and a macro environment that’s hard to read, we believe the business is well set for growth, to be delivered in both a responsible and sustainable manner.”

Online order intake in Q3 (with almost all showrooms closed) was up +222.5% YoY.

“We recognise revenues and profits upon delivery to our customers through our made-to-order operating model, using our own three factories and also our partner suppliers located in the UK, Eastern Europe and the Far East,” reads DFS’ statement. “In order to maintain manufacturing efficiency, we manage our lead times to keep output broadly consistent across a year, and minimise idle capacity. In response to the exceptional demand that we have seen, we have already increased capacity significantly sufficient to support revenue growth over the first 49 weeks of 10.4% [exclusing prior year Sofa Workshop comparatives] relative to the same period in the 2019 financial year.  

“Our revenue growth in FY21 has however been constrained by sector-wide pressures on supply chains from raw materials availability, container shipping delays (including the effects of disruption in the Suez Canal), and Covid-19 disruption of factory production. Therefore the majority of the revenues and profits from our strong final quarter of trading will be recognised in our FY22 financial year.”

FY22 profit before tax is expected to be £66-£96m.

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