DFS Furniture plc Post-Close Trading Update (5800N)
August 10 2017 - 1:00AM
UK Regulatory
TIDMDFS
RNS Number : 5800N
DFS Furniture plc
10 August 2017
10 August 2017 For immediate release
DFS FURNITURE plc
POST-CLOSE TRADING UPDATE
STRATEGIC PROGRESS MAINTAINED IN CHALLENGING MARKET
DFS Furniture plc (the "Group"), the market leading retailer of
living room furniture in the United Kingdom, today provides an
update on trading for its financial year ended 29 July 2017.
Results reflect weaker trading environment in second half
As announced in June, revenue in the second half has been weaker
than we expected owing to significant declines in store footfall
and customer orders across April, May and June. We believe this to
be an industry-wide issue, resulting from the uncertain economic
environment and unexpected general election, exacerbated by warm
weather in May and June. Our summer sale, however, started
satisfactorily in July, consistent with trends we have seen in
offline and online sector indicators.
Overall, Group revenues for the second half were 4% lower than
the prior year, following an increase of 7% in the first half, to
deliver growth of 1% over the year as a whole. Consequently, EBITDA
for the year will be at the low end of the GBP82-GBP87m range
previously given, with revenue impacts being partly offset by cost
flexibility and the early benefits of operating efficiency
initiatives.
Strategic progress maintained
We continue to make good progress in the implementation of our
growth strategy in all key areas:
Broadening our appeal to customers. Since the beginning of our
new financial year we have announced the acquisition, subject to
regulatory approval, of Sofology, a distinctive and complementary
business, with a network of 37 stores in the UK and a strong
technology-led omnichannel proposition. We have also announced an
exciting new exclusive brand partnership with the UK lifestyle
brand Joules, to manufacture and sell their first sofa collection,
with roll-out to stores beginning in late 2017.
UK and Republic of Ireland DFS store roll-out. We have
maintained our programme of opening new 10-15,000 sq. ft. DFS
stores in the UK and Republic of Ireland with Ashford opening in
April 2017. Our pipeline for the new financial year includes new
stores in Wednesbury, Rugby and Haverfordwest, together with the
refurbishment and relaunch of the DFS store in Croydon. We also
plan to open a further store in our smaller format of around 5,000
sq. ft.
Omnichannel. Our online business has maintained its strong
momentum and market leadership, with the DFS website continuing to
attract over 40% of all UK upholstery segment web traffic, and
seeing good increases in visitor numbers during the year.
Retail space optimisation. Our Customer Distribution Centre
("CDC") conversion programme is proceeding to plan, and will be
completed early in the current financial year to give us a total of
19 CDCs in the UK. Using the released space in our stores, we plan
to open a further five Dwell and five Sofa Workshop co-located
stores over the next six months.
International expansion. Following two new store openings in The
Netherlands during the year, we now have five stores in the
country, and plan to add a sixth at Eindhoven shortly. We will also
begin national test marketing and our operating profit investment
in The Netherlands remains in line with our previous guidance.
Positive long-term prospects despite a currently very
challenging market
While the UK furniture market is currently very challenging with
the outlook still uncertain, we remain focused on our growth
strategy to deliver substantial long-term returns for our
shareholders. Although revenue growth is likely to be harder to
achieve in the short term than in the recent past, we have
identified opportunities to drive operating efficiencies and
product margin growth. As announced on 3 August 2017, our
refinancing on more favourable terms will also deliver an annual
saving of approximately GBP1m in the cost of the Group's debt
financing.
We intend to maintain our plans for growth investment, and are
confident that this will allow us to continue to outperform the
market over the longer term. DFS has historically capitalised on
adverse market conditions to build our position in the UK market
for living room furniture, leveraging our fundamental strengths in
store sales intensities, scale of operations, flexible cost base
and vertically integrated business model.
The Board therefore continues to believe that the Group enjoys
excellent long-term prospects to deliver profitable growth, strong
cash generation and attractive shareholder returns as one of the
UK's best-known brands, a major British manufacturer and the
country's leading retailer of living room furniture.
The Group expects to announce its preliminary results on 5
October 2017.
Enquiries
DFS (enquiries via FTI)
Ian Filby (CEO)
Nicola Bancroft (CFO)
Mike Schmidt (Director of investor.relations@dfs.co.uk
Corporate Finance)
FTI Consulting +44 (0) 20 3727
Jonathon Brill 1000
Georgina Goodhew dfsfurniture@fticonsulting.com
Eleanor Purdon
About DFS Furniture plc
DFS is the clear market leading retailer of living room
furniture in the United Kingdom. We design, manufacture, sell and
deliver to our customers an extensive range of furniture products.
The business operates a retail network of living room furniture
stores in the United Kingdom and Europe, together with an online
channel. These have been established and developed gradually over
48 years of operating history. We attract customers to our stores
and website through our substantial and continued investment in
nationwide marketing activities and our reputation for high quality
products and service, breadth of product ranges and price points
and favourable consumer financing options.
This information is provided by RNS
The company news service from the London Stock Exchange
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