Sofa retailer DFS warns fewer house sales will impact trading
Furniture retailer DFS this morning warned that weakening consumer confidence and a slump in housing transactions has impacted sofa sales.
The figures
The company has changed its accounting reference date to 30 June, meaning this morning’s results cover a shortened 48 week period.
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Profit before tax in the 48 weeks to 30 June was £22.4m, a drop of 13 per cent compared to the 52 weeks to 28 July 2018.
Revenue increased 3.5 per cent to £901m this year, compared to £870.5m in 2018.
However, pro-forma results for the 52 weeks to 30 June this year show that the company achieved underlying profit before tax of £50.2m, an increase of 31.1 per cent.
The pro-forma results also show a revenue boost of 14.4 per cent to £996.2m.
Why it’s interesting
The company said its trading performance last year was “good overall” but warned that a drop in footfall due to weakening consumer confidence and fewer house purchases has led to “subdued” order levels in the first 12 weeks of the new financial year.
In March the company presented a new strategy for the group to “prepare it it navigate an uncertain trading environment”.
DFS said it has developed plans to mitigate the effect of a no-deal Brexit, including a “sustained drop” in the value of Sterling and the “consequent inflationary effect” for imported products.
What DFS said
Group chief executive Tim Stacey said: “Recent trading conditions have reflected the increasingly uncertain political and economic backdrop and we have seen reduced levels of footfall across our brands, which we attribute to lower levels of consumer confidence and housing transactions, the two key drivers of the upholstery market.
“Although we have had some success in driving conversion to mitigate this trend, we note that over the first twelve weeks of the financial year order intake levels have been subdued.
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“Financial performance in the year ahead will inevitably be dependent on broader political and economic developments and at this stage it is difficult to predict what will happen specifically within the upholstery market. However, we remain focused on those variables that we can control and on executing our strategy, which we believe puts us in a strong position in the market over the long-term.”