DFS says its customers have continued to turn online to order during the pandemic, as ecommerce sales rose by 76% in the first 24 weeks of its financial year, compared to the same time last year. It is continuing to manufacture and deliver despite Covid-19 restrictions that mean its 65 of its 212 showrooms are currently closed – in Wales, the Netherlands and Tier 4 areas in England – although deliveries have been disrupted by ongoing congestion at the port of Felixstowe and a European shortage of foam.
The sofa and upholstered furniture multichannel retailer, whose DFS brand is ranked Top500 in RXUK Top500 research, says it is benefitting from a greater appetite for spending on home categories – and gross sales rose by 19% in the 24 weeks to December 13, compared to the same time last year, it said in a pre-close interim trading update today. Its growth, mostly through orders placed in the first quarter of its year, came “despite ongoing disruption at The Port of Felixstowe and raw materials supply issues relating principally to foam availability in Europe.” As showrooms closed in November, orders fell by about 5% in the second quarter.
DFS Group’s extra orders are currently about £200m ahead of the same time last year. Looking ahead it expects delays at the port to continue and lead times to continue to be above average. That may mean that it does not see the benefit of extra orders it takes in the second half of this year until the first half of its next financial year.
In the meantime, it remains “focused on accelerating our strategy to lead sofa retailing in the digital age,” though new online initiatives.
DFS now expects that full-year pre-tax profits will be in the upper half of the current market consensus – the consensus figure is currently £107.1m, in a range between £81.2m to £118.0m. That contrasts with the pre-tax loss of £63.1m that the retail group reported in the year to June 28 2020. It has also put financing of £225m in place.
DFS Group chief executive Tim Stacey says: “I want to thank every colleague in our group for their resilience, spirit and determination to overcome the many and varied operational challenges that we have faced since reopening our business after the first lockdown.
“We are working all hours focusing on what we can control to look after our people and our customers. I want to thank our customers for their patience given the ongoing disruption to our deliveries due to port congestion and raw material shortages, as well as apologise to those that have experienced delays.
“While the current environment is clearly unpredictable, our business model is resilient and we are well set for medium term growth.”
DFS says it has prepared in case the Brexit transition period ends in no deal. It says in that event, trading on WTO terms would mean no tariffs apply to its upholstered finished goods. It has also hedged exchange rates for the next 18 months to cover its purchases from the Far East. It adds, “We have prudently planned for the risk of an exacerbation of current port congestion and delays and we are grateful for the patience that our customers have shown in the face of currently extended fulfilment lead times.”
DFS Group operates brands including DFS, Sofology and Dwell through a multichannel sales model.