DFS profits surge as consumers spend on their homes

The retailer also reported that orders have remained strong in the new financial year so far and that it should meet earnings expectations, despite challenges such as supply chain disruption. 

DFS’ underlying pre-tax profit climbed 55.6% to a record £105.8m versus the pro-forma figure from 2019 before the pandemic.

Revenue excluding Sofa Workshop, which was disposed of, rose 9.7% to £1.06bn in the year to June 27.

DFS said that growth in new orders was “significantly stronger than the revenue growth and was driven by market share gains, pent-up demand from lockdown one and a shift in consumer spending to the home”. 

That resulted in a “high closing order bank” that will be recognised in the current year.

DFS reported that the order intake “has also remained strong in the current financial year to date” and is “well ahead” of its previous scenario of 7% growth versus 2019.

The retailer said: “This order intake provides significant resilience and confidence in our outlook. However, the constraining factor on our reported short-term financial performance will be our pace of conversion of the order bank, which depends on both our supplier partner manufacturing capacity and also the capacity of our proprietary logistics operations.”

Although it is confident in meeting the “medium scenario” of profit expectations, DFS cautioned: “It should be recognised that the short-term operational environment continues to be exceptionally uncertain and difficult, given well-reported logistics disruption, cost inflation pressures and unplanned Covid absences.”

DFS chief executive Tim Stacey said: “Our record profits delivery is a fitting tribute to all the hard work of our colleagues and testament to the resilience and flexibility of our integrated business model.

“Despite numerous operational challenges during the pandemic, I’m proud that we have remained focused on our strategic agenda to lead sofa retailing in the digital age. We also see further growth opportunities into the medium term derived from extending the reach of our retail brands and optimising our operating platforms.

“As we enter a new financial year, the group is very well positioned to build on its market leadership position in sofa retailing and to target further growth as we invest to strengthen our business platforms and extend our retail proposition into adjacent product categories.”