// DFS records full year revenues of £725m, down by £271m year-on-year
// Pre-tax loss expected to be in the range of a £56m-£58m, subject to audit
// DFS is also cutting jobs at its Dwell and Sofa Workshop fascias
DFS has announced it would be cutting jobs as it restructures following lockdown, as its full year results reveal a swing to a loss and a dramatic plunge in sales.
The furniture retailer, which owns Sofa Workshop, Dwell, Sofology and of course DFS, has confirmed that it would be taking “necessary actions” after its revenues for the year ending June 28 came in at £725 million – a dramatic £271 million drop compared to last year.
DFS attributed the drop in sales to the closure of stores and pause in deliveries to comply with Covid-19 restrictions for the majority of the final quarter.
- DFS and Furniture Village to begin reopening handful of stores
- DFS secures funds of £70m to preserve liquidity
- DFS bosses take pay cut, suspends deliveries amid coronavirus pandemic
As a consequence of the delivery suspension, DFS said it expects to record a pre-tax loss of between £56 million to £58 million, subject to audit and excluding Sofa Workshop and Dwell restructuring costs.
DFS added that it had been performing in line with expectations until the lockdown started in late March, but since stores reopened on June 1 it experienced year-on-year growth of 69 per cent.
Meanwhile, DFS said online order intake surged 77 per cent year-on-year since March 23, the start of lockdown.
DFS did not confirm how many jobs were at risk as part of plans to restructure its Sofa Workshop and Dwell fascias, but said that the reduction in headcount will incur restructuring costs of less than £2 million.
The restructure is also aimed at improving the brands’ profits, and is estimated to have a total cost of approximately £16 million to £18 million.
In addition, DFS has deferred the opening on five new Sofology showrooms “in order to allow us to take immediate advantage of attractive units that may be vacated by distressed retailers on otherwise fully-occupied retail parks”.
On the other hand, DFS still plans to grow the Sofology fascia to around 70 stores.
“Reflecting the challenging outlook for our market, we are taking necessary actions to preserve our future competitiveness,” DFS said in its post-close trading update.
“We have commenced an operational restructuring of Sofa Workshop and Dwell to improve the returns generated by those brands.
“Largely driven by this restructuring, we anticipate that we will recognise non-cash impairments of acquisition-related goodwill and some limited property right-of-use assets.
“We will also incur some limited cash restructuring costs of less than £2 million associated with a targeted reduction in headcount.
“In total we expect to recognise a P&L charge of £16 million-£18 million in financial year FY20 in relation to this restructuring.”
The news comes after DFS secured a £70 million banking facility in April to go alongside its existing £250 million revolving credit facility.
It also received a £64 million cash injection through the sale of 42.6m new shares, and DFS said it was well-positioned to weather the pandemic and its aftermath.
“Our strong online platforms have served customers well throughout the lockdown and we have seen consistently high order intake, which I’m pleased to see has continued as our showrooms reopened,” DFS chief execytive Tim Stacey said.
“There is no doubt that consumer behaviours are changing fast and as such we are accelerating our omni-channel strategy through increased investment in technology right across the customer experience.”