TIDMDFS
RNS Number : 4440J
DFS Furniture PLC
22 December 2020
22 December 2020
Immediate release
DFS Furniture plc ("DFS" and the "Group")
Pre-Close Interim Trading Update
DFS Furniture plc, the market leading retailer of living room
and upholstered furniture in the United Kingdom, today announces a
trading update for the first twenty-four weeks of the financial
year to date, ending 13 December 2020.
-- Following Government guidelines, manufacturing and deliveries
are continuing through current 'Tier 4' restrictions, with showroom
activities currently closed in Wales, Netherlands and 'Tier 4'
areas in England
-- Gross sales* over the first twenty-four weeks of the
financial period were 19% ahead on the comparative prior year
period, and our order bank remains strong providing future
resilience
-- Gross sales* via our market-leading online channels were 76%
ahead on the comparative prior year period
-- Performance reflects the benefit of a shift in spending to
home categories, and also market share gains, leading to
particularly strong order intake in Q1 and a resilient Q2 to date
despite extensive showroom closures in November
-- Subject to the extent of enforced showroom closures and based
upon cautious order intake assumptions, we expect full year Profit
Before Tax and Brand Amortisation will be within the upper half of
the current market forecast range**
-- Robust financial position; Closing interim*** pre IFRS 16 net
debt expected to be between GBP40-50m, a reduction over the 26
weeks of over GBP115m
Trading Overview
We continue to manage the Group in accordance with Government
guidelines to restrict the spread of COVID -- 19. Out of our estate
of 212 showrooms, 52 showrooms in 'Tier 4' areas in England, all
our 7 showrooms in Wales and the 6 Netherlands showrooms are
currently closed in line with Government guidance. Our showrooms in
other areas are currently open and our market-leading retail
websites, manufacturing sites and delivery operations continue to
be operational nationally as has been the case throughout the first
half.
Gross sales* have increased by 19% against the comparable
twenty-four week period ending 15 December 2019. Gross sales via
our online channel increased 76% against the same period. This
performance primarily reflects strong order intake growth during
the first quarter and has been achieved despite ongoing disruption
at The Port of Felixstowe and raw materials supply issues relating
principally to foam availability in Europe.
The Group continues to perform resiliently, with Q2 order
intake* over the first 11 weeks down approximately 5% year-on-year
despite the impact of extensive showroom closures in the period. We
believe the Group is achieving market share gains and benefiting
from a shift in consumer spending towards the home.
Robust Financial Position
We expect to report a closing interim*** net debt position
(pre-IFRS16 basis) of GBP40-50m, reflecting the strength of first
half trading supported by associated working capital inflows.
The Group has also yesterday signed an amendment and extension
to its senior revolving credit facility with its existing syndicate
of banks. This amended GBP225m facility has a December 2023
maturity (previously was August 2022) with options in place to
extend for a further two years, subject to customary mutual
agreement. Banking covenants are equivalent to those of the
previous facility. As a result of the refinancing, the temporary
restrictions on the ability of the Group to pay dividends and
undertake acquisitions will be lifted.
Brexit Update
The Group continues to monitor the status of Brexit discussions,
and as previously disclosed, has made preparations in case of a no
trade deal between the United Kingdom and European Union.
In considering the impact of the UK exiting the EU on our Group,
it is important to note that under 'WTO terms' there are no tariffs
applicable to our upholstered finished goods. We also carry
exchange rate hedging to cover eighteen months of forecast Far East
purchases. We have prudently planned for the risk of an
exacerbation of current port congestion and delays and we are
grateful for the patience that our customers have shown in the face
of currently extended fulfilment lead times.
Outlook
Our expected full year financial out-turn is underpinned by
revenue growth in the financial year to date and the current strong
order bank position, which is currently approximately GBP200m
higher year-on-year on a revenue basis. Therefore, subject to the
extent of enforced showroom closures and based upon cautious order
intake assumptions of -15% for the second half of the financial
year, we would expect that full year Profit Before Tax and Brand
Amortisation would be within the upper half of the current market
consensus range**.
As manufacturing operations, (both internal and those of certain
suppliers) are running close to capacity, port delays appear likely
to persist, and lead times are above average, the benefit of any
second half order intake outperformance may shift increasingly to
H1 FY22.
While short term macro-economic trends are uncertain, we remain
focused on accelerating our strategy to lead sofa retailing in the
digital age. We continue to roll-out new initiatives to further
extend our clear market-leading online proposition in the sector.
Evidence suggests that showrooms remain at the heart of the sofa
customer journey, however, and we believe our omnichannel approach
leaves us well-positioned to maintain our trend of market share
gain that is extending our leadership. Although our financial
performance will never be immune to the short term market
environment, we believe our cash generation across the cycle and
our overall growth prospects will drive attractive long-term
financial returns for our shareholders.
The Group will announce its interim results for the period
ending 27 December 2020 on 9 March 2021.
Comment from Tim Stacey, Group Chief Executive
"I want to thank every colleague in our Group for their
resilience, spirit and determination to overcome the many and
varied operational challenges that we have faced since reopening
our business after the first lockdown.
We are working all hours focusing on what we can control to look
after our people and our customers. I want to thank our customers
for their patience given the ongoing disruption to our deliveries
due to port congestion and raw material shortages, as well as
apologise to those that have experienced delays.
While the current environment is clearly unpredictable, our
business model is resilient and we are well set for medium term
growth."
* Adjusted for the disposal of Sofa Workshop
** Consensus Profit Before Tax and Brand Amortisation median
forecast for the 52 weeks to 27 June 2021 of GBP101.7m on an
underlying IFRS16 basis with a range of GBP81.2m to GBP118.0m. This
is comparable to the -GBP63.1m underlying pro forma result as
reported for the 52 weeks to 28 June 2020.
*** Twenty-six week interim period ending 27 December 2020
Enquiries:
DFS (enquiries via Tulchan)
Tim Stacey (Group CEO)
Mike Schmidt (Group CFO)
Phil Hutchinson (Investor Relations)
investor.relations@dfs.co.uk
Tulchan
James Macey-White
Jessica Reid
Amber Ahluwalia
+44 (0)20 7353 4200
dfs@tulchangroup.com
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
showrooms in the United Kingdom and Europe, together with an online
channel. These have been established and developed gradually over
50 years of operating history. We attract customers to our
showrooms and websites 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.
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