DFS profits to come in at upper end of expectations despite disruption

DFS reported that gross sales in the first 24 weeks of its financial year climbed 19%. Online sales surged 76% in the same period, to December 13.

The retailer said it had benefited from a consumer spending shift towards home categories, which meant a “particularly strong order intake” in the first quarter and “resilient” second quarter so far despite store closures during last month’s Covid lockdown.

DFS said out of its 212 branches, 52 stores in the newly imposed tier four regions of England, along with seven in Wales and six in the Netherlands are closed at present.

DFS said the full-year performance expectation was underpinned by a strong order bank and “cautious” assumptions about order intake, which is expected to be down 15% in the second half.

The group’s manufacturing capabilities – its own and those for some suppliers – are running close to capacity. Combined with port delays, this may lead to longer lead times than normal so “the benefit of any second-half order intake outperformance may shift increasingly” to the first half of the 2022 financial year. 

DFS said it is prepared for the possibility of a no-deal Brexit. The retailer said: “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 18 months of forecast Far East purchases. We have prudently planned for the risk of an exacerbation of current port congestion and delays.”

DFS chief executive Tim Stacey said: “While the current environment is clearly unpredictable, our business model is resilient and we are well set for medium-term growth.”