Ahead of its financial year end on 26th June 2022, DFS Furniture has revised its trading projections based on "slowing market-wide demand" in Q4.
The retailer says its saw double-digit growth in the volume of orders taken across the group in Q3 (ended 27th March) relative to a FY19 pre-pandemic comparative period. This growth was achieved despite offsetting significant cost inflation through mitigation and retail price increases.
However, says DFS, moving into Q4 the UK furniture market has seen a change in demand patterns, with recent Barclaycard data suggesting a -2.1% reduction in transactions in April relative to pre-pandemic periods – DFS says it has seen a similar change in order volumes, yet that there is evidence that it has maintained its recent market share gains.
"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," states the group.
"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".
