DFS Furniture PLC has released a pre-close trading statement, outlining its performance and expectations for the 53-week period ending on June 30, 2024. The company had previously projected revenues of £1,000m-£1,015m and PBT(A) of £20-£25m, with potential profit risk due to Red Sea shipping delays. However, challenges in the upholstery sector and ongoing Red Sea routing issues have led to a revised expectation of PBT(A) in the range of £10-12m, with lower delivered customer orders and increased shipping costs contributing to this adjustment.
Despite the difficult trading environment, DFS Furniture PLC has made progress in mitigating the impact on its profitability. The company has maintained a record value market share of over 38.5% in the face of a c-10% decline in consumer demand in the upholstery sector. Additionally, it has grown its full-year gross margin rate and reduced operating costs, which are expected to be down approximately £25m year on year. The net bank debt at the end of the period is anticipated to be £165-170m.
Looking ahead, DFS Furniture PLC has seen an improving trend in its Group order intake, which is up over +9% in the fourth quarter. The company is optimistic about the potential for market recovery in the FY25 period, citing widely predicted lower inflation and interest rates that are expected to positively impact upholstery market demand levels. DFS Furniture PLC believes it is well-positioned to capitalize on any market recovery, given its market leadership position and progress on its cost base.
The company's Group CEO, Tim Stacey, expressed optimism about the future, stating, "Whilst the economic outlook remains hard to predict, we expect the widely predicted lower inflation and interest rate environment to have a positive impact on upholstery market demand levels with the declines experienced across the last three years starting to reverse and the market slowly recovering in our FY25 period."
Inquiries about DFS Furniture PLC can be directed to the company's investor relations team or Teneo, a communications consultancy.