DFS says its online orders rose by 77% during lockdown – but says its full-year revenues will be £271m down on expectations, and it is warning of a full-year loss of up to £58m.
The sofa retail group is now prioritising investment in technology and omnichannel for its DFS and Sofology brands, reflecting the way in which shoppers have shifted their retail spending further online during lockdown.
DFS group chief executive Tim Stacey said: “Our strong online platforms have served customers well throughout the lockdown and we have seen consistently high order intake, which I’m pleased to see has continued as our showrooms reopened. There is no doubt that consumer behaviours are changing fast and as such we are accelerating our omnichannel strategy through increased investment in technology right across the customer experience.”
A full-year trading update today showed DFS full-year revenues would be £271m lower than expected, thanks to Covid-19 lockdown and the pause in sofa deliveries that has lasted for most its final quarter. As a result it expects to make a pre-tax loss of between £56m and £58m.
The retail group, which operates the DFS, Sofa Workshop, Dwell and Sofology brands, says trading had been satisfactory until it closed all of its operations, other than its website, on March 23. Between then and July 12, online orders grew by 77%, year-on-year. Showrooms reopened during late May and early June, and between the beginning of June and July 12, orders placed in-store have risen by 69% on last year. It believes this growth has come from latent demand from customers who would otherwise have bought during the spring, but says it remains cautious for its outlook given the “wider economic uncertainty”.
DFS, a Top500 retailer in RXUK Top500 research, says that social distancing measures are not a material barrier to order intake since its showrooms tend to be large. Its manufacturing and final mile deliveries are now fully operational with new working practices and safety measures in place.
The retailer still wants to grow shop numbers for its Sofology brand, which it expects to grow to 70 showrooms in total, although it is deferring the already-agreed opening of five new shops in the hope of taking space on previously fully occupied retail parks as other retailers close shops.
DFS is to restructure its Sofa Workshop and Dwell brands “to improve the returns generated by those brands”. That is likely to include some job losses – the retailer said it expected to spend up to £2m as it reduced its headcount. It also expects to write down up to £18m in connection with the restructuring.
