DFS vows to continue its spending on advertising

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Sofa giant DFS has said it will continue to spend heavily on marketing under its new owners.

DFS, which was bought by Advent International in April, is the second biggest advertiser in the retail industry, behind Tesco. Its former owner Lord Kirkham made DFS famous for its massive marketing budget and its omnipresence on TV.

Chairman Richard Baker said: “The very substantial marketing spend is a great asset and we envisage keeping the budget the same. That’s what drives our market-leading position.”

He said new management had “simplified the ads a bit”. “We don’t want to lose the impact but we can be a bit more assured with our style of communication.”

DFS adjusted EBITDA jumped 10.6% to a record £71.8m while sales grew 13% to £653m in the year to July 31. Like-for-likes rose 12%.

Baker said its first quarter’s orders are “in line with last year’s record levels. We’re not being hit by a downturn, yet”. He added: “There’s a big growth opportunity with online.” It accounts for a “high single digit proportion of the business”, and Baker expects this to grow.

He also said that DFS would be hunting out smaller 12,000 sq ft to 15,000 sq ft stores, without the warehouse space at the back that existing 20,000 sq ft stores have. Instead, smaller hubs will hold stock.

DFS has 74 stores and has identified a further 20 locations where it could open in three years.

Regarding the VAT rise in January, Baker said DFS is “not just going to stick all the prices up”.