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DFS continues to invest for long-term success in digital age as it reports first-half fall in orders and revenues; Halfords warns on profits

Image courtesy of DFS

DFS today reports a year-on-year fall in first-half orders but says it remains committed to its strategy of investing for the long-term – and its aim of leading furniture retailing in the digital age.

The sofa retailer says orders were 4.8% down in the 26 weeks to December 25 compared to the previous year. But they were 10.6% ahead of the same period in pre-pandemic 2019, and DFS says its performance was stronger in the second quarter (+18.8% year-on-year), and that it has made a good start to the winter sale trading period, at the start of the third quarter. 

Group gross sales – recognised only when orders are delivered to customers – were 1.1% lower than last time, but 9.6% higher than the same period in 2019. DFS still expects that as long as momentum continues to improve, pre-tax profits before one-off costs will come in at about £36m, in a range of between £30m and £40m – mostly falling in the second half of the year. 

The retailer says its scale, brands, innovation, digital capabilities, final mile logistics platform and its integrated retail strategy all support its strategy – “to lead furniture retailing in the digital age”. 

DFS group chief executive Tim Stanley says: “The group has traded well through the second quarter and the start of the important winter sale trading period. Whilst the macroeconomic environment remains challenging and hard to predict, we reiterate our full-year profit guidance supported by the positive current trading momentum.

“As always we continue to invest for the long term success of the business, to further strengthen our market leading position and with our established platforms, scale and expertise we believe we are well set up for growth over the medium term.”

DFS, ranked Top350 in RXUK Top500 research, operates alongside the Sofology and Dwell brands in the DFS Group. 

Halfords scales back profits expectations in the light of inflation and staff shortages

Also reporting this week, Halfords scaled back its profit expectations in the light of rising inflation and staff shortages. The retailer, ranked Top50 retailer in RXUK Top500 research, reported that group revenue in the 13 weeks to December 30 was 21.7% ahead of the same time last year in total, and by 4.6% on a like-for-like basis that strips out the effect of store – and business – openings and closures. Revenues were 38.3% (+12.6% LFL) ahead of the same period in 2019.

But looking ahead, Halfords expects to see a deeper decline in demand for high-ticket retail products than previously expected, in light of rising inflation. A challenging labour market also means that the retailer and autocentres business is struggling to recruit enough skilled technicians for its autocentres business. 

Halfords is reducing its pre-tax profit forecast for its current, 2023, financial year to between £40m and £60m. Looking ahead to the next, 2024, financial year, Halfords says it is difficult to forecast with any certainty. But it says it is well-positioned for the long term. 

Graham Stapleton, Halfords chief executive, says: “We have seen strong revenue growth in what are exceptionally challenging circumstances, and we have continued to grow our market share whilst also tightly managing our costs, inventories and cashflows. Consumer demand for our services and needs-based categories, which now account for the majority of our revenue, continues to grow, and our Motoring Loyalty Club is exceeding expectations as customers recognise the value of its unrivalled discounts and offers.

“With unprecedented demand in our motoring services business, we are particularly impacted by the nationwide skills shortage, with recruitment proving to be extremely challenging in the current labour market. We are continuing to take a range of actions in order to fill 1,000 new automotive technician roles, which include our new Later Life Apprenticeship programme, as well as a focus on attracting more women and young people from disadvantaged backgrounds into automotive apprenticeships”

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