// DFS posts falling half-year sales & profits on back of “challenging market conditions” & lower footfall
// Sales slipped 5.7% to £488m for the period as the impact of “political uncertainty” & weaker consumer confidence offset online growth
// Underlying pre-tax profits for the past half year fell to £20.5m compared to £38m a year earlier
DFS has said that “challenging market conditions” hit its half-year trading and warned that the developing coronavirus outbreak meant it could not give accurate full year forecasts.
The furniture retailer said sales slipped 5.7 per cent to £488 million for the 26 weeks ending December 29, as the impact of “political uncertainty” and weaker consumer confidence offset online growth.
DFS said trading for the current half-year started “satisfactorily” but the retailer has observed a change in consumer footfall to its showrooms “in very recent days” following the Covid-19 outbreak.
It said that any disruption to order intake over the key Easter and May Bank Holiday trading periods is likely to impact upon its performance for the 2020 financial year.
DFS said it has also seen “limited operational impacts”, with the retailer’s four Chinese finished goods suppliers shutting down for an extended period after Chinese New Year.
It added that uncertainty surrounding the impact of the virus meant “it is not possible to give guidance with any certainty for the full year”.
Underlying pre-tax profits for the past half year fell to £20.5 million compared to £38 million in the same period a year earlier.
DFS said it expected annual profits to be hit by up to £5 million following disruption to systems in its Sofa Workshop business.
It said it hopes to improve profitability by securing property savings through a combination of rent reductions and downsizing some of its showrooms.
DFS said that, despite falling footfall, it was encouraged by digital growth, with group gross online sales increasing 4.5 per cent to £117 million.
“We continue to make progress on our strategic agenda focused on driving the DFS core business, further developing our group platforms and setting Sofology up for future growth,” DFS group chief executive Tim Stacey said.
“Despite the challenging retail environment, and excluding some isolated systems disruption in Sofa Workshop, our performance over the first half has been as expected, given the exceptional prior year comparative driven by latent demand.
“Notwithstanding the uncertain short-term outlook, we remain confident in the group’s financial strength and relative track record of performance in all environments.”
with PA Wires