REG - DFS Furniture PLC - Trading Statement

DFS FurnitureAnnouncement

17/07/2023 07:00

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RNS Number : 1365G  DFS Furniture PLC  17 July 2023

THIS STATEMENT CONTAINS INSIDE INFORMATION

 

DFS FURNITURE plc

 

PERIOD END TRADING UPDATE

 

FY23 profit within previously guided range

Group achieves record market share

 

 

DFS, ("DFS" and "the Group"), the market leading retailer of living room and
upholstered furniture in the United Kingdom, announces the following update
for the 52 week period to 25 June 2023 ("FY23").

 

FY23 Highlights:

 

●     Record market share of 38%, underpinned by the Group's leading
brands, scale and well invested integrated retail proposition

●     Underlying profit before tax and brand amortisation for FY23 in
line with previous guidance at slightly above £30m despite the market being
significantly worse than expected

●     Gross margin rate continuing to improve, supported by freight
costs returning to pre-pandemic levels and effective cost control

●     Consumer demand continues to be impacted by the macroeconomic
environment; market volumes down by c.15%-20% across FY23

●     Expect to continue to outperform a declining market in FY24 and
grow market share delivering low single digit £m profit growth

 

FY23 trading performance delivered strong market share gains in a weak market

 

The Group has a track record of growing market share in all trading
environments.  This has continued through FY23, with market share increasing
to 38%. Gross sales increased by 15% compared to the comparative* pre pandemic
period (FY19), down 4% year on year.

 

The well-publicised global macro-economic challenges impacted overall market
volumes, which were down c.15-20% year-on-year. However, an improving gross
margin rate and good cost control supported an estimated underlying profit
before tax and brand amortisation of just over £30m.

 

Outlook for FY24

 

Trading at the start of the year has been consistent with the Board's
expectations. We currently expect market volumes to decline by mid-single
digits for the full year, however, the economic outlook remains uncertain. To
that end the business has been prudent in its planning, is taking actions to
maximise operating cashflow through continuous margin improvement, delivering
cost savings and reducing capital expenditure. Despite the ongoing pressure on
market volumes, we expect underlying profit in FY24 to be slightly above FY23
levels, supported by the Group's leading brands, scale and well invested
integrated retail proposition.

 

Longer term view

 

When the market recovers, given our increased market share, the operating
leverage within the business and our negative working capital cycle, we are
well positioned and remain confident in delivering our long-term targets of
£1.4bn of revenue, an 8% profit before tax margin and 75% post tax free cash
conversion driving strong returns for our shareholders.

 

Comment from Tim Stacey, Group Chief Executive

 

"I would like to take this opportunity to thank every one of our colleagues
and partners for their commitment, hard work and dedication as we trade
through the increasingly challenging market conditions.

 

We are in the strongest position we have ever been as a Group in terms of
market share, and when the market recovers, we will be well placed to deliver
our strategy and grow our earnings and cash flows towards our longer term
plan"

 

The Group will report its FY23 results on 21 September 2023.

 

*Pro forma unaudited 52 week period to 30 June 2019. Excludes International
and Sofa Workshop given the closure of these operations.

 

DFS (enquiries via Teneo)

Tim Stacey (Group CEO)

John Fallon (Group CFO)

Phil Hutchinson (Investor Relations)

investor.relations@dfs.co.uk

 

Teneo

James Macey-White

Jessica Reid

Ayo Sangobowale

+44 (0)20 7353 4200

85fs.dfs@teneo.com

 

 

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