DFS welcomes double digit growth in Q3
The retailer noted that moving into the fourth quarter, the UK furniture market has seen a change in demand patterns
DFS has welcomed double digit growth in its order volume in its third quarter of trading, compared to the FY19 pre-pandemic period.
The volume growth in the period ending 27 March 2022 was achieved despite the group offsetting “significant” cost inflation through mitigation and retail price increases.
The retailer noted that moving into the fourth quarter, the UK furniture market has seen a change in demand patterns, with recent data from Barclaycard suggesting a 2.1% reduction in transactions in April against pre-pandemic periods, with a similar change in order volumes seen across the group.
Nonetheless, it said this reduction in transaction volumes comes despite evidence of DFS maintaining its recent market share gains based on its own proprietary data.
The group did however warn that ongoing Covid linked supply-chain disruption, combined with lower order intake since April, has led to lower levels of production and deliveries relative to its previous expectations.
This comes despite the group increasing its weekly production and delivered revenues progressively over H2, to “record” levels in the fourth quarter.
Looking ahead, it now expects UK and ROI full-year revenues of approximately £1,150-1,160m, with an underlying profit before tax and brand amortisation of £57-£62m. This compares to FY19 full-year revenues of £996.2m and profit before tax of £50.2m.
It also expects to close the financial year with an order bank that is elevated by £30m, or 2.5% of annual revenues relative to pre-pandemic levels, which it said will provide “some resilience” going into FY23.
In its latest trading update, DFS said: “It is difficult to forecast consumer behaviour over the next twelve months, but should the trends observed in April and May continue across FY23, this would broadly balance the volume benefit from the elevated opening order bank. Following the growth of the group in volume terms relative to pre-pandemic levels, we also believe that we have the opportunity to drive further cost efficiencies from our scale.
“However, our trading history shows that the group has gained market share during periods of furniture market decline, and we believe that we will remain well-positioned against the market, given our scale, brand strength and our integrated retail strategy.”
