DFS in “advanced stages” of discussions for £60m-£70m funding

DFS confident for H1 results after “resilient” Q2
“While the current environment is clearly unpredictable, our business model is resilient and we are well set for medium term growth,” says DFS CEO.
// DFS in “advanced stages” of new discussions for additional debt facility of £60m-£70m
// This is intended to supplement an existing £250 million bank facility
// DFS is also preparing for a possible equity fundraiser to further strengthen its balance sheet

DFS has revealed that it is in the “advanced stages” of talks over an additional £60 million to £70 million debt facility as it looks to bolster its finances in the face of coronavirus.

In a note to the City this morning the furniture retailer, which shut all its stores last month, said the funding would supplement an existing £250 million bank facility.

It also said it was preparing for a “possible non pre-emptive” equity fund raise of up to 19.9 per cent of its existing capital in order to further strengthen its balance sheet and provide “resilience for a continued disrupted trading environment”.


Meanwhile, DFS said it made further progress with regards to “reducing its monthly cash operating costs following positive discussions with suppliers and landlords, together with continued support from the government”.

The retailer said cash outflow was expected to be less than £14 million per month until its stores, manufacturing and distribution operations re-open once lockdown restrictions are lifted.

DFS’s note to the City included a brief trading update.

It said it has continued to sell online in recent weeks and has seen online gross sales increase by 20.2 per cent from March 25 to April 17.

The retailer, which also owns the likes of Sofology, added that it has in place all measures “necessary and appropriate” for warehouse activities to operate.

It intends to restart sofa deliveries once “it is clear there is a safe and workable approach for two-person installations into customer homes”.

Looking forward, DFS said the combination of the proposed additional financing together with the operating cost mitigation measures is expected to provide “significant liquidity” to see through an extended lockdown.

“The board is confident that the group can navigate the Covid-19 crisis and deliver its
strategy over the longer term when the trading environment normalises,” DFS stated.

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