DFS today said that its omnichannel business model and scale of operations would give it some resilience if the “volatile political and economic backdrop” continues to affect “already low consumer confidence levels”.
The retailer, whose DFS brand is ranked Top350 in IRUK Top500 research, said in an end-of-year trading update that it was making progress with its “strategy of transforming our business to lead sofa retailing in the digital age”.
It pointed to underlying sales growth of 7% – or 14% after the acquisition of Sofology – and online sales growth of 17% in the year to June 30. Underlying full-year pre-tax profits are on a positive track, expected to come in at more than £50m from £38.3m last time.
DFS said that all of the group’s brands, which include The Sofa Workshop and Dwell alongside Sofology, had reported growing like-for-like sales in the second half of the year.
But, it said, “we remain mindful of the risk that the volatile political and economic backdrop may further impact on already low confidence confidence levels. Our progress in the near term will inevitably be somewhat dependent on this backdrop.”
And it added: “Whilst weak trading environments make it harder to achieve significant levels of revenue growth, our omnichannel consumer offer, showroom sales densities, scale of operations and portfolio of well-recognised brands provide some resilience. We also believe that we can continue to drive profit benefits and synergies from our previous capital investments and acquisitions.
“We are executing our strategy of transforming our business to lead sofa retailing in the digital age. We believe the market will return to historical long-term growth rates in due course and that as clear market leader we are well-positioned to benefit, delivering strong levels of cash generation and attractive shareholder returns in the long term.”
The retailer has appointed Mike Schmidt to the role of chief financial officer. Previously he held the role on an interim basis.
Image courtesy of DFS