DFS to cut jobs at Dwell and Sofa Workshop as revenue falls £271m
Furniture firm DFS has announced that it will cut jobs as part of a restructuring programme after the coronavirus pandemic caused revenue to drop £271m year-on-year to £725m.
The company said that the cuts would take place at subsidiaries Dwell and Sofa Workshop, and were necessary in order to maintain DFS’ “future competitiveness”.
The restructurings had been touted back in March, when DFS said it was actively reviewing the cost structures of both brands.
The pandemic has hit the FTSE 250 company hard, with lockdown restrictions forcing DFS to suspend all activities apart from online sales on 23 March.
In the four-month period to July, the firm said online orders had risen 77 per cent, and have remained high as showrooms reopened.
Chief executive Tim Stacey said that as a result of the strong online performance the firm would increase its investment in its technology platform to keep pace with the changes in consumer behaviour.
In order to protect its financial position, DFS furloughed around 5,000 of its staff, which, in combination with its business rates relief, saw the company reduce operation costs to £14m a month for April and May.
All trading activities have now been restarted, with DFS reporting that order intake was up for the second half of the year.
However, as a result of the three-month suspension of deliveries, the firm said that it was set to swing to a loss of up to £58m in this financial year, precipitating the need to make cuts.
The reduction in headcount is expected to cost less than £2m, with DFS also anticipating a £18m profit and loss charge related to the restructuring.
Despite the improved order book, which stands 69 per cent up since 1 June, the sofa maker said it was “cautious” about its outlook for the rest of 2020 and 2021.
But there was some comfort to be had in confirmation that DFS would net an incremental around £100m of revenues in the first half of next year due to its order backlog.