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DFS issues profit warning due to “weak market”

Published: 15 June 2017 - Fiona Garcia

Furniture retailer reports declines in footfall and customer orders hit sales in the second half. 

DFS reports that footfall in store and customer orders were down in the second half
DFS reports that footfall in store and customer orders were down in the second half

In a trading update today, DFS said that, despite highlighting an expectation for a “softer market environment” for the second half of the financial year, trading weakened beyond its expectations, with “with significant declines in store footfall leading to a material reduction in customer orders.”

The upholstered furniture retailer said it believes the trend is market wide and “in line with industry indicators”, which it attributes to uncertainty regarding the general election and macro economic environment.

DFS said: “As stated previously, the upholstery market does see short-term demand fluctuations from time to time, within an overall historical trend of long-term growth.

“Driven by these short-term revenue effects, we therefore, now anticipate EBITDA over the full year to be lower than market expectations for the current year, and in the range of £82m-£87m.

“Notwithstanding this, we have maintained our investment in the business and we are confident that we will outperform the market over the longer term, driven by our scale, business model and proven growth levers.

“We believe our expectations for the next financial year are realistic based on consumer confidence remaining broadly in line with current levels, given its consequent impact on upholstery demand. We expect continued strong cash generation that has allowed the recent announcement of a £20m special dividend in addition to our ordinary dividend.”

A further trading update is due on August 10, 2017, following the completion of the Group’s financial year.

 

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