DFS reports that gross sales in its financial year to date (the 24 weeks to 13th December 2020) have increased by +19% YoY, with gross online sales up +76% YoY over the comparative period in 2019. The period also saw it achieve a debt reduction of over £115m.
DFS says this performance reflects the shift in spending to home categories, as well as market share gains, which led to particularly strong order intake in Q1 and a resilient Q2 to date (intake is down just -5% YoY for the 11 weeks so far), despite extensive showroom closures in November and ongoing port and raw material supply disruption.
Of DFS' estate of 212 showrooms, 52 are currently in Tier 4 areas in England, while all seven showrooms in Wales (and the six in the Netherlands) are closed in line with Government guidance.
Subject to the extent of enforced showroom closures, and based on cautious order intake assumptions, DFS expects its full year profit (before tax and brand amortisation) to be within the upper half of the current market forecast range.
The group has also signed an amendment and extension to its senior revolving credit facility, enabling it to lift the temporary restrictions on its ability to pay dividends and undertake acquisitions.
DFS states that it continues to monitor the Brexit situation closely, but points out that under WTO terms there are no tariffs applicable to its upholstered finished goods.
"As manufacturing operations (both internal and those of certain suppliers) are running close to capacity, port delays appear likely to persist, and lead times are above average, the benefit of any second half order intake outperformance may shift increasingly to H1 FY22," reports the retailer.
"While short term macro-economic trends are uncertain, we remain focused on accelerating our strategy to lead sofa retailing in the digital age. We continue to roll out new initiatives to further extend our clear market-leading online proposition in the sector.
"Evidence suggests that showrooms remain at the heart of the sofa customer journey, however, and we believe our omnichannel approach leaves us well-positioned to maintain our trend of market share gain that is extending our leadership. Although our financial performance will never be immune to the short-term market environment, we believe our cash generation across the cycle and our overall growth prospects will drive attractive long-term financial returns for our shareholders."
Tim Stacey, group chief executive, says: "I want to thank every colleague in our group for their resilience, spirit and determination to overcome the many and varied operational challenges that we have faced since re-opening our business after the first lockdown.
"We are working all hours focusing on what we can control to look after our people and our customers. I want to thank our customers for their patience given the ongoing disruption to our deliveries due to port congestion and raw material shortages, as well as apologise to those that have experienced delays. While the current environment is clearly unpredictable, our business model is resilient and we are well set for medium-term growth."