18 May 2024, 13:33
By Furniture News Sept 23, 2021

Profits up as DFS adapts to new normal

In its preliminary results for the 52 weeks ended 27th June 2021, DFS states that it saw revenue from continuing operations grow by £94.1m (or +9.7% compared to the non-Covid disrupted pro-forma FY19 period) as it leveraged its scale, operating experience and longstanding relationships to accelerate its make-to-order deliveries rate.

Growth in new orders was significantly stronger than revenue growth, and was driven by market share gains, pent-up demand from the first lockdown and a shift in consumer spending to the home, leading to a high closing order bank that will be recognised through H1 FY22.

Online revenues were up +184.3% YoY, with record underlying profit (before tax, excluding brand amortisation) achieved of £105.8m (£99.2m on a reported basis).

DFS also realised a significant reduction in net bank debt, and established a new three-year agreement for a £225m ESG-linked senior revolving credit facility.

Strong consumer demand continued over the first 12 weeks of FY22, with the current order bank at a record high, states DFS.

Group CEO Tim Stacey says: “Our record profits delivery in the last financial year is a fitting tribute to all the hard work of our colleagues and testament to the resilience and flexibility of our integrated business model. Despite numerous operational challenges during the pandemic, I’m proud that we have remained focused on our strategic agenda to lead sofa retailing in the digital age and are on track to achieve the incremental £40m of profit benefits set out in 2018. We also see further growth opportunities into the medium term derived from extending the reach of our retail brands and optimising our operating platforms.

"As we enter a new financial year, the group is very well positioned to build on its market leadership position in sofa retailing and to target further growth as we invest to strengthen our business platforms and extend our retail proposition into adjacent product categories."

During the period, the retailer made £9m of incremental efficiency savings across its property and marketing platforms.

It opened five new Sofology Showrooms in FY21 with eight openings planned in FY22, and integrated Dwell into the brand operating structure, creating a competitive fulfilment solution for DFS’ extended homewares offer.

It also launched 15 upholstered bed ranges through the DFS brand, with "positive" early results, and strengthened its commercial beds partnerships, "driving the opportunity to gain share in the £5b+ bed and non-upholstery living room market".

Walid Koudmani, market analyst at financial brokerage XTB, comments: "DFS' preliminary results proved to be quite positive, with improvements seen across the board indicating a strong recovery from the pandemic. The company not only saw growth in revenue from continuing operations, but also a significant boost in market share and an increase in online revenue of +184.3% YoY. While it will be reinstating dividends, today’s results illustrate the resilience of DFS in a difficult environment and showed the company's ability to remain competitive by adapting its strategy."

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