Subdued trading sees sales tumble at DFS
DFS FURNITURE has reported a 6 per cent fall in sales in the second half of 2019 following subdued trading in August and September.
The Doncaster-based group said the fall reflects a challenging consumer environment and it is mindful of the broader political and economic uncertainty that still exists.
However, the sofa retailer said the key winter sale trading period has started satisfactorily and it expects full-year profits to be broadly in line with expectations.
DFS, which also owns the Sofology, dwell and Sofa Workshop brands, reported better recent trading and an expected “low single digit” rise in sales over the coming six months.
Analysts at Jefferies said the gross sales slump indicated a likefor-like sales drop of around 7 per cent over the half-year.
Jefferies analyst Caroline Gulliver said the 6 per cent sales slide was a “little worse than we feared”.
However, she added: “UK consumer confidence has started to improve and there is every chance that confidence will continue to improve into DFS’ key spring selling season, driving second-half sales.”
DFS said the sales fall in its first half “reflects the challenging market environment impacting footfall and the performance in the strong prior year period”.
Overall group revenues will be given a boost by the addition of new showrooms over the past six months.
The market is currently expecting annual underlying earnings for DFS to edge up slightly to £51.2m from £50.2m the previous year.
DFS said it has appropriate cost saving actions in place to help mitigate continued market weakness.
The group said in September that cost saving measures include renegotiating lower rents and housing brands under the same roof where it has more than one outlet in the same retail park.
It is aiming to secure £6m to £8m of annual rent savings through renegotiating lease terms.
Matt Walton, senior retail analyst at GlobalData, said the sharp deterioration in consumer confidence over the heightened risk of a no-deal Brexit discouraged many shoppers from making larger purchases.
“While DFS still expects profit
We expect DFS to stand its ground within upholstery in 2020. Matt Walton, senior retail analyst at GlobalData.
before tax to be in line with expectations, it remains cautious about market conditions,” he said.
“With greater consumer certainty after the General Election, at least in the short term, DFS is bullish about its second half.
“It re-iterated that it has historically performed well in challenging conditions and the work it has done to drive online growth and conversion will support it.
“With its partnership brands widening DFS’ customer base – enabling customers to trade down from the likes of John Lewis and up from ScS & IKEA – and a lack of consideration continuing to plague Harveys, we expect DFS to stand its ground within upholstery in 2020.”