|  Updated: 

DFS reveals deliveries have dipped below expectations as supply chain issues bite

By: and

Add as a preferred source on Google
DFS has announced that it will cut jobs as part of a restructuring programme necessitated by the coronavirus pandemic

DFS Furniture (DFS) has revealed its production and deliveries are below expectations in the fourth quarter of the fiscal year, driven by Covid-linked supply chain issues and lower order intakes since April

The sofa specialists have seen a drop off in order volumes across the group, in line with data from Barclaycard suggesting a 2.1 per cent reduction in transactions across the furniture market, relative to pre-pandemic levels.

This reduction in transaction volumes comes despite the group maintaining its recent market share gains.

It also contrasts with a third quarter characterised by high commercial activity, which saw double digit growth in the volume of orders taken across the group relative to pre-pandemic levels.

Despite the slowdown in sales, the company still expects to post post full year revenues of approximately £1.15-1.16bn, alongside underlying profit before tax and brand amortisation of £57-£62m.

This compares to pre-pandemic full-year revenues of £996.2m and profit before tax of £50.2m in 2019.

Following payment of the recent £25m special dividend and the ongoing share repurchases, DFS expects to close the year with a net bank debt position of less than £100m, in line with the upper end of its 0.5-1.0x target leverage range. 

Its financial year will conclude on 26 June 2022.

The company’s shares slumped by some 16 per cent yesterday morning, closing depleted by 11 per cent.
It comes as a subdued couple of months of trading for many big ticket sectors has finally caught up with the sofa-seller, according to Peel Hunt analyst Jonathan Pritchard.

“A big turndown in demand (we suspect that volumes are down about 2-3 per cent in the last two months, having been up 10 per cent + in March) means that profit numbers are too high,” he added.

Despite waning consumer demand, analysts are confident that DFS will be able to make the most of the economic outlook.

“We’d imagine the competition is really struggling and history tells us that DFS emerges from crises stronger,” Pritchard added.