DFS market share grows despite sales slump

The sofa specialist said sales fell from £486m to £446.8m in the nine months to April 28.

EBITDA fell from £56.2m last year to £44.5m due to a £3.6m spend on retail and manufacturing expansion.

Chief executive Ian Filby said the company had gained from increasing sales from new stores and improved margins. He said the company’s online business was “growing”.

The company has opened 12 new stores so far this year including a new Tottenham Court Road store in central London which opened on May 26 while the first DFS store outside the UK opened in Dublin at Easter.

Filby said: “In what has remained a challenging trading environment, we have continued to focus on maximising DFS’s market share and increasing the efficiency of our operations.

“As we expected, this has delivered an improving trend in our performance during the year, with the third quarter benefiting from a growing sales contribution from new stores and improved margins as the result of more cost-effective media buying.

“The pre-opening and launch costs of new stores reduced EBITDA by £3.1m during the first nine months, and there was a further £500,000 expense associated with the expansion of our UK manufacturing capacity by adding additional production shifts at two of our factories. In total, our expansion is creating 500 new retailing and manufacturing jobs in the UK.”

He added: “This year’s improving trend is expected to continue in the final quarter. Our new stores will continue to make a growing sales contribution, and are expected to contribute to profit in this period.

“We will also continue to benefit from our increased UK manufacturing capacity and improved marketing efficiency. Despite the difficult trading environment for the retail sector, we expect to deliver a robust result for the year.”