Describing the period as "a year of significant challenge due to the weak economic backdrop", DFS Furniture has announced its preliminary results for the 52 weeks ended 25th June 2023.
Group revenue from continuing operations was £1088.9m, a decrease of -5.3% YoY, but +13.8% ahead of the pre-pandemic FY19 pro-forma period.
Underlying PBTa was down -49.3% – "as anticipated, given strong post-pandemic sales in the prior year and very weak market demand in FY23, combined with inflationary pressures", states the retailer.
However, the group also reports continued market share gains (+2% pts), taking its share to a record 38% of the UK upholstery market. It also says that operationally, it is in the strongest position since the pandemic, reflected in its customer experience scores, with supply chains, order banks and customer lead times back to normal.
It has established a cost efficiencies programme across its product, property and operating cost models, targeting some £50m in annualised savings by FY26.
DFS says its own-brand range continues to evolve, broadening appeal and extending into higher price points – while on the Sofology side, three further showrooms have been opened, taking the total to 58 (from 38 at acquisition) and closer to the group's nationwide target of 65-70. Sofology's new leadership team has developed a new three-year growth plan entitled Drive to 25, supporting an ambition to become the UK's number-two sofa retailer.
"In the Home category, we continue to strengthen the foundations for growth in this £5b market opportunity, with a dropship delivery solution launched and exclusive brand partnerships extended to bed ranges, driving online beds and mattress sales up +69% YoY," the group adds.
Looking ahead, DFS' underlying PBTa guidance for FY24 is for a low single-digit YoY improvement (£30m-£35m), supported by continued market share gains and margin improvements, based on the assumption that market volumes will decline -5% YoY. Profit will be weighted to the second half, reflecting weak market demand at the end of FY23 and the timing of cost-saving initiatives.
Group CEO Tim Stacey says: "The group is operating in one of the toughest economic climates we have experienced. Whilst we are confident the upholstery market will recover, forecasting the specific timing and pace of the recovery is challenging.
"We do, however, expect to generate a modest YoY increase in profit before tax in FY24 despite a relatively weak market in which we expect volumes will continue to decline across the next 12 months. Looking to the future as market volumes recover, we remain confident in achieving the financial performance set out at our Capital Markets Day in 2022 of £1.4b of revenues at an 8% PBT margin."
Jane Bednall is to step down from the board at the end of the FY, with Loraine Martins taking over Jane's responsibilities as the designated non-executive director representing the views of the wider workforce.
