27 May 2024, 01:06
By Furniture News Mar 16, 2022

DFS sales decline against strong comparatives

DFS has announced its interim results in H1 (ended 26th December 2021).

Now operating on a larger scale than prior to the pandemic – more than +15% larger – DFS reports revenue from continuing operations of £561.1m, up +17.4% Yo2Y, with significant accelerations in the rate of deliveries across Q2 and into Q3.        

New Sofology showrooms, refreshed DFS showroom formats and continued investment in its digital channels drove +2%pt market share growth, translating to a 12-month order intake of over £1.15b in revenue equivalent terms.

DFS says it overcame operational pressures to deliver a reported PBT in the half of £21.6m – up +35.8% Yo2Y, but significantly down against H1 FY21's £72.1m. It says Covid-related supply chain challenges impacted net margin and operating costs to the tune of some £21m in the half.

"Importantly, underlying cash gross profit per transaction has remained stable, despite a decrease in margin rate, as finished goods cost inflation has been offset or passed through," states DFS. "Investment in the Sofa Delivery Company and manufacturing capacity are now enabling us to support the new revenue base with Q2 delivered revenues +24% versus Q1, and momentum continuing into Q3."

Online revenue penetration normalised to 23.2% versus the prior year comparator that contained lockdowns, while the group made progress on its new Integrated Retail Intelligence System (IRIS), through which it hopes to build upon recent market share capture and provide cost efficiency benefits.

DFS reports a new ambition to grow to £1.4b of revenues through the launch of a Pillars and Platforms strategy, unlocking new growth categories and maximising the potential of its made-to-order manufacturing model.

CEO Tim Stacey says: "We delivered a strong performance in the first half of the year, with market share gains and strong revenue growth on the pre-pandemic comparators. This was in spite of significant logistics and supply chain challenges, and once again I would like to thank all of our colleagues across the group for their hard work and resilience in achieving this result.

"Trading across H2 to date has started strongly, again emphasising the increased scale of the business and demonstrating the success of our approach to mitigating the impact of inflationary pressures on our profit expectations.

"Our expectations for total profits across FY22 and FY23 remain unchanged, with our confidence supported by our significant order bank and strong trading in H2. We narrow our scenario range for FY22 to recognise that manufacturing and logistics disruption may affect H2 throughput, however our resilient order bank should mean any such in-year disruption will cause profits to shift into the next FY23 reporting period.

"We are therefore pleased to be able to reward shareholders with a special capital return that will deliver a total return to shareholders of approximately £80m over a 12-month period.

"Looking forward, whilst the macro-economic environment remains uncertain, we believe that our scale, brand strength and integrated retail strategy will continue to drive market share gains ahead of the competition. We will continue to invest in our digital platforms, our showrooms, our delivery networks and our UK manufacturing capacity, as well as expansion into other home categories which we believe will continue to drive long-term growth and profitability."

DFS has seen strong H2 trading to date, and reports double-digit volume and value order intake growth.

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