Furniture retailer’s strong online sales
Consumers spending more on homes
RETAIL: DFS Furniture said it had continued to trade strongly online and in its showrooms over recent weeks, as consumers spent more on their homes during lockdown.
In the last six weeks, the furniture retailer has received orders for £70m more than during the same period last year, it said on Tuesday.
DFS FURNITURE said it had continued to trade strongly online and in its showrooms over recent weeks, as consumers spent more on their homes during lockdown.
In the last six weeks, the furniture retailer has received orders for £70m more than during the same period last year, it said on Tuesday.
The results, which are well ahead of what the company was expecting, will add to its already strong order book which DFS believes will result in a further in-year revenue benefit of £100m.
“We believe that this trading performance reflects a combination of consumers currently spending more on their homes relative to other sectors, latent demand caused by the nationwide lockdown and also a strengthening advantage from our hybrid digital and physical retail offering, which is particularly relevant in this consumer environment,” DFS said in a statement.
Its shares soared 13 per cent on the news as trading started in London.
The company added that there could still be some risks, citing uncertainty around the coronavirus and Brexit.
“The financial year has started strongly. However, we do note that significant uncertainty related to Covid-19 on UK consumer confidence and the potential impact of Brexit exists and it is exceptionally difficult to assess the outlook beyond the short term,” it said.
“While positive trading momentum currently remains we do note that some consumers may be bringing forward spending decisions and this may impact trading later in the financial year.”
The business added that despite these risks, its momentum means that earnings are more resilient and the company has more financial headroom.
It is also “well-positioned to capitalise on opportunities as its markets recover”, the board said.
“DFS is probably £100 (million) ahead of where it is expected to be in sales... Customers are turning up in good numbers... and they are not being shy with AOV (average order value) either,” Peel Hunt analysts said.
The update provides further evidence that parts of the economy are starting to stage a recovery following the disruption caused by the pandemic.
Earlier this week, UK industry reported the fastest growth in almost seven years after being boosted by further easing of lockdown restrictions, although companies are still rapidly shedding jobs.
The IHS Markit/CIPS Flash UK composite purchasing managers’ index (PMI), a closely watched measure, hit 60.3 in August, from a reading of 57.1 in July.
Everything above 50 is considered growth.
Tim Moore, economics director at IHS Markit, said: “The combined expansion of UK private sector output was the fastest for almost seven years, following sharp improvements in business and consumer spending from the lows seen in April.
“There were encouraging signs that customer-facing service providers have started to catch up with the rebound seen earlier this summer across the wider economy, with easing lockdown measures, staycations and the Eat Out To Help Out scheme all reported as factors supporting growth in August.”