Upholstered furniture retailer DFS has reported a decline in full year sales and a reduction in profit.
According to its preliminary results for the 53 weeks ended 30 June 2024, total gross sales fell 7.9% to £1.3bn from £1.4bn in 2023. Revenues were down 9.3% to £987.1m.
DFS, including Dwell, sales declined 7% to £1bn from £1.1bn, while Sofology sales were down 11.2% to £264.8m from £298.1m. Digital sales represented 24.3% of revenues, up from 24% last year.
Underlying pre-tax profit resulted at £10.5m, down 65.7% from £30.6m. Reported pre-tax losses amounted to £1.7m compared to its profit of £29.7m. Gross margin increased from 54.4% to 55.8%.
DFS said that the performance was impacted by record low market demand and Red Sea shipping disruption, deferring sales and profits to future periods.
During the period, DFS entered into an exclusive agreement with Ted Baker. The range has been “incredibly well received” by its customers looking for that “extra bit of luxury”.
“We have reduced operating costs across all areas of the business, be it by operating segment or expense type,” DFS added. “This has been accomplished by undertaking a rigorous review and reappraisal of the cost base to ensure it is appropriate for both today’s market environment and future, stronger market environments.
“This programme is ongoing with examples of cost reductions to date achieved via improved operating models, utilising AI, enhanced procurement activities, and utilising data/MI to improve operational performance. The savings achieved in FY24 will provide a further uplift into the following year in addition to new initiatives that we have planned.”
Looking ahead, DFS said it remains confident in delivering its £1.4bn revenue and 8% PBT medium-term targets as the market recovers.
Tim Stacey, Group Chief Executive Officer said: “I want to sincerely thank all our colleagues for their enthusiasm and continued commitment to delivering a great service to our customers in what has been a very challenging period for the Group given the market conditions.
“Despite the challenges that the business has seen, we are optimistic for the future and see signs that market growth could soon return. We expect recent improvements in housing transaction data and strengthening consumer balance sheets to lead to increased upholstery market demand across the FY25 financial year. In addition, thanks to the success we have had growing our gross margin and improving our operational efficiency we expect to deliver profits in line with market consensus, weighted to the second half.
“It is clear that the upholstery market has a long road to recovery given the 20% decline on pre-pandemic levels that we have seen. Despite the challenges we have faced, we remain confident that the business is well positioned to capitalise on market recovery. Given our strong market leadership position, the operational leverage in the business, our well invested asset base and negative working capital cycle we expect to deliver strong returns for our shareholders.”
