DFS Furniture plc Post-Close Trading Update (8634G)
August 11 2016 - 2:00AM
UK Regulatory
TIDMDFS
RNS Number : 8634G
DFS Furniture plc
11 August 2016
11 August 2016 For immediate release
DFS FURNITURE plc
POST-CLOSE TRADING UPDATE
STRONG PERFORMANCE WITH RESULTS ON TRACK
DFS Furniture plc ("DFS" or the "Group"), the leading retailer
of upholstered furniture in the United Kingdom, today provides an
update on trading for its financial year ended 30 July 2016.
Continued strong performance in the second half
Revenue for the financial year was up 7% on the previous year.
The Group continued to deliver a strong performance through the
second half, with revenue for the period also up 7% compared to the
second half of last year.
In light of second half trading, the Board expects DFS to
deliver a record performance for the full year with results towards
the upper end of market expectations.
This robust and consistent performance reflects the
implementation of DFS's proven growth strategy, building on its
established market leadership to further broaden product and brand
appeal. Growth initiatives include a measured programme of store
expansion in the UK and overseas, retail space release, continued
development of the Group's omnichannel proposition and constant
enhancement of its product range. This growth strategy is
delivering ahead of the Board's expectations in a number of areas
and generating revenue growth above that seen in the retail
furniture market.
Revenue growth has benefited from the contributions of the
Group's Sofa Workshop and Dwell subsidiaries, which together have
added c.1% point to overall growth in both the second half and full
year. As anticipated, margins achieved by both the Dwell and Sofa
Workshop subsidiaries are currently lower than overall Group
margins given their more limited scale, pre-opening costs and the
requirement to invest further in infrastructure.
The Group has established a successful store-in-store concept
for Dwell to occupy store warehousing space converted for retail
use in the DFS estate. This has led to a decision in FY2016 to
accelerate the retail space conversion programme and Customer
Distribution Centre (CDC) openings, and in consequence bringing
forward associated capital expenditure. Eleven CDCs are now
operational and the programme should be completed in FY2017, with a
further eight expected to open. While the full potential for the
Dwell store-in-store opportunity is still being assessed, the
initiative is likely to generate incremental profits when compared
to conversion of that space to retailing of beds and dining
furniture, with the additional benefits expected to begin to accrue
in FY2018.
Free cashflow has remained strong with net debt slightly less
than 1.5x EBITDA at the end of FY2016. The Board anticipates
announcing a progressive final dividend in October in line with
guidance of an overall payout for the whole year of 45-50% of
profit after tax.
Outlook
The Board recognises that, following the EU Referendum,
retailing of furniture in the UK faces an increased risk of a
market slowdown with additional cost pressures from foreign
exchange movements, whilst it is likely that the retail environment
will remain intensely competitive. The Group's trading since the
Referendum result has not indicated any weakening of demand,
although the six weeks since 23 June is too short a period to
permit a meaningful assessment of future furniture retail
trends.
Overall the Group remains very well positioned to mitigate
economic headwinds with resilient features in its operating model
giving it the potential to achieve continued growth in its share of
the UK retail furniture market were such adverse conditions to
arise and persist. Store sales densities, scale of operations and a
highly flexible cost base provide resilience against weaker trading
conditions, relative to the retail sector. Furthermore, vertical
integration provided by the Group's UK in-house manufacturing
operations limits currency exposure. The Group's efficient use of
capital has also enabled it to maintain consistently excellent
levels of cash generation and shareholder returns in all market
environments in the past.
The Board continues to believe that the Group enjoys excellent
prospects to deliver long-term profitable growth, strong cash
generation and a progressive dividend policy as one of the UK's
best-known brands, a major British manufacturer and the country's
leading retailer of upholstered furniture.
The Group expects to announce its preliminary results on 6
October 2016.
Enquiries
DFS (enquiries via FTI)
Ian Filby (CEO)
Nicola Bancroft (CFO)
Mike Schmidt (Director of Corporate investor.relations@dfs.co.uk
Finance)
FTI Consulting +44 (0) 20 3727
Jonathon Brill 1000
Georgina Goodhew dfs@fticonsulting.com
Tom Hufton
Notes: The Group believes market expectations for revenue for
FY2016 to be between GBP746.9m and GBP755.5m, and for profit before
tax to be between GBP60.7m and GBP64.6m.
FY2016 is the 52 week trading period ending 30 July 2016; FY2017
is the 52 week trading period ending 29 July 2017 and FY2018 is the
52 week trading period ending 28 July 2018.
About DFS Furniture plc
DFS is the clear market leading retailer of upholstered
furniture in the United Kingdom. We design, manufacture, sell and
deliver to our customers an extensive range of upholstered
furniture products. The business operates a retail network of
upholstered furniture stores in the United Kingdom and Europe,
together with an online channel. These have been established and
developed gradually over more than 45 years of operating history.
We attract customers to our stores and website through our
substantial and continued investment in nationwide marketing
activities and our reputation for high quality products and
service, breadth of product ranges and price points and favourable
consumer financing options.
This information is provided by RNS
The company news service from the London Stock Exchange
END
TSTAKKDDABKDAFD
(END) Dow Jones Newswires
August 11, 2016 02:00 ET (06:00 GMT)
Dfs Furniture (LSE:DFS)
Historical Stock Chart
From Apr 2024 to May 2024
Dfs Furniture (LSE:DFS)
Historical Stock Chart
From May 2023 to May 2024