THIS STATEMENT CONTAINS INSIDE
INFORMATION
DFS FURNITURE
PLC
MARKET SHARE GAINS AND COST
BASE ACTIONS PARTIALLY MITIGATE A WEAK TRADING
ENVIRONMENT
DFS Furniture Plc, ("DFS" and "the
Group"), the market leading retailer of living room and upholstered
furniture in the United Kingdom, announces the following update on
recent trading through to 11 June 2024 of the 53 week period to 30
June 2024.
FY24
guidance update:
At our interim results update on 19
March 2024 we guided that we expected revenues of £1,000m-£1,015m
and PBT(A) of £20-£25m, with an additional profit risk of up to £4m
if Red Sea shipping delays continued through to our year end
date.
Since that update, consumer demand in
the upholstery sector has remained challenging and Red Sea routing
issues have persisted resulting in delays to customer deliveries
and higher freight costs.
As a result, we now expect PBT(A) to
fall in the range of £10-12m, with the reduction in profit
expectations being driven by:
·
A lower level of delivered customer orders, with
£12-14m of delayed deliveries from the Red Sea disruption. Those
deliveries are expected to move into FY25. FY24 revenues are now
expected to be in a range of £995m-£1,000m.
·
Higher shipping costs as a result of freight rates
increasing above previous expectations in our fourth
quarter.
·
A weak upholstery market partially mitigated by
selective investments to stimulate required order volume levels in
Quarter 4.
Progress on our focus areas has helped to partly mitigate the
profit impact of a very weak upholstery market:
Consumer demand in the upholstery
sector has declined c-10% in volume terms* year on year from a weak
starting point bringing overall market demand levels to record
lows. The Group has continued to operate through the period with
record value market share of over 38.5%*.
Despite higher shipping costs and
investments to drive required order intake volumes in Q4, we have
continued to grow our full year gross margin rate, which is
expected to be up +140bps year on year. In addition, we have
reduced our operating costs** which are expected to be down
approximately £25m year on year. Together these have limited the
lower sales impact on our profitability.
Net bank debt at the end of the period
is expected to be £165-170m (total facility size £250m).
*Proprietary banking data from external third party
providers
**Excluding depreciation and interest
Recent trading and outlook into FY25:
We have been encouraged by an
improving trend in our Group order intake, which is up over +9% in
our fourth quarter to date, in line with our expectations. The
recent improvement comes as we annualise weaker prior year
comparatives and also following successful initiatives to
strengthen the product ranging and pricing in Sofology and
reintroducing 4 year interest free credit at select times to
maximise revenue and profit in this difficult trading
environment.
Whilst the economic outlook remains
hard to predict we expect the widely predicted lower inflation and
interest rate environment to have a positive impact on upholstery
market demand levels with the declines experienced across the last
three years starting to reverse and the market slowly recovering in
our FY25 period. We are well placed to capitalise on any market
recovery given our market leadership position, the operational
leverage in the business and the progress we are making on our cost
base.
Enquiries:
DFS
(enquiries via Teneo)
Tim Stacey (Group CEO)
John Fallon (Group CFO)
Phil Hutchinson (Investor
Relations)
investor.relations@dfs.co.uk
Teneo
James Macey-White
Jessica Reid
Ayo Sangobowale
+44 (0)20 7353 4200
85fs.dfs@teneo.com
About
DFS Furniture plc
The Group is the clear market-leading
retailer of living room furniture in the United Kingdom. Our Group
purpose is to bring great design and comfort into every living
room, in an affordable, responsible and sustainable manner. We
operate an integrated physical and digital retail network of living
room furniture showrooms and websites in the United Kingdom and
Republic of Ireland, trading through our leading brands, DFS and
Sofology. We attract customers through our targeted and national
marketing activities and our reputation for high quality products
and service, breadth of product offer and favourable consumer
financing options. We fulfil orders for our exclusive product
ranges through our own UK finished goods factories, and through
manufacturing partners located in the UK, Europe and Far East, and
delivered with care through our expert final-mile delivery service
"The Sofa Delivery Company Limited".