Furniture Village’s bottom line was dented last year as it invested to defend itself against a ‘deteriorating economic backdrop’.
The furniture retailer said EBITDA fell 31% to £6.6m in the year to April 2, which it attributed to additional costs.
It opened seven new stores and upgraded its online platform during the period, and is in the process of replacing its ERP system.
Furniture Village said these investments will “clearly facilitate much improved efficiencies and profitability in the years ahead”.
Order intakes jumped 10% to nearly £300m, driven by uplifts in both like-for-like store volumes and online, along with significant increases from new stores, the retailer said.
In the last two years, it has grown its portfolio by 25% to 50 stores, and the retailer plans to open two new stores in its current financial year.
Furniture Village said the underlying business model remains “highly cash generative” with a closing cash position of £16.7m, after investment in fixed assets of £10.7m.
Tough trading conditions
Its chief executive Peter Harrison said external pressures were creating a challenging trading environment and warned that the situation would “without doubt” worsen.
“The muted GDP growth prospects for the UK, as outlined in the recent autumn Budget, were a stark reminder of the combined impact of inflationary pressures and an allied reduction in real wage growth on both disposable incomes and business and consumer confidence, these factors hardly contributing to a buoyant retail market.
“Without doubt, the trading environment is set to become more challenging and, as ever, we must leverage the significant investments made in recent years in stores, online and in our systems to increase productivity and efficiencies, and continue to grow underlying profitability and cash, whilst remaining true to our ethos of ‘doing it properly’.”
Harrison added that Furniture Village’s current financial year “started strongly” and said the business is performing ahead of expectations.
However, he insisted that would not lull the business into a false sense of security, “particularly in light of a deteriorating economic backdrop”.
“As ever, if the market is to shrink, then we must and will look to our people in every area of the business to counter this and increase our market share, our unique market positioning facilitating this,” he said.