DFS posted its half-year results today with an increase in profits and sales across the group. Boss Tim Stacey told Retail Week his plans to keep the success surging with Sofology expansion plans.
The furniture retailer recorded a 24% uplift in underlying EBITDA year on year to £32.8m in the 22 weeks to December 30, 2018, spurred by a 29% increase in group revenue to £422.3m.
The specialist retailer reported like-for-like sales growth across all its brands, but its most recent acquistion Sofology was the group’s stand out performer.
Sofology’s revenue spiked more than five-fold during the period to £110.6m, up from £19.2m in the previous year.
To monopolise on this momentum, Stacey told Retail Week the retailer planned to expand Sofology’s bricks-and-mortar footprint nationwide.
”Sofology is in 22 of the top 50 locations where DFS is, so we know from all the data which the best cities are to go to,” he said.
“We want Sofology to be at least a £300m business and earn industry-standard EBITDA margins. Using the DFS buying scale, we can make it incredibly profitable going forward and it’s a great distinctive business.”
Currently Sofology has 42 showrooms nationwide but Stacey has his sights set on increasing that to 70 over the coming years, and plans to roll out up to six new stores a year in new locations as well as potential co-locations with DFS outlets.
Despite strong sales growth during the first half of its financial year, Stacey said the business had experienced “a softer start to 2019”, which he attributed to diminished consumer confidence and and a “decreased number of housing transactions”.
Stacey said the retailer’s “profit expectations for the financial year remain unchanged” provided that there was “no weakening in this environment” for the remainder of the financial year.
However, with Brexit looming, is Stacey concerned that consumer confidence could fall further?
“We’re comfortable with where the analysts are in terms of expectations for this year,” he said.
“Our planning assumption is that the market isn’t going to change dramatically and if it does we will have to update but we don’t see that in this moment in time.”