DFS sees challenges ahead as consumer confidence continues to wane
DFS has been hit hard by Britain’s faltering economy, falling consumer confidence and the Brexit-induced collapse in the pound.
Furniture retailer DFS is forecasting a challenging year ahead after posting a mixed set of results for the first six months of the financial year.
Weekly Business Digest Newsletter
In a half year trading update, the retailer reported a 4% rise in sales in the 26 weeks to January 27.
However, excluding the sales of recently acquired Sofology, revenue was down 3.5%.
DFS, like other retailers, has been thumped by Britain’s faltering economy, falling consumer confidence and the Brexit-induced collapse in the pound.
Soaring inflation caused by the pound’s demise has pushed up shop prices for hard-pressed consumers, leading retail sales across the board to slump.
Looking ahead, DFS again pointed to the collapse in consumer confidence making for a difficult market.
“We recognise that the living room furniture retail market is likely to remain challenging in 2018, given current consumer confidence levels,” the group said.
Nevertheless, DFS said that like-for-like trading momentum strengthened during the first half of year, adding that it expects the second half to demonstrate a “stronger year-on-year gross sales trend”.
It also maintained its financial outlook for the full year.
Shares were up over 2% in morning trading at 196.6p.
Late last year, DFS bought a clutch of stores and assets from failed retailer Multiyork Furniture to boost its national chain and Sofa Workshop brand.
Neil Wilson, senior market analyst at ETX Capital, said: “A pretty terse half-year report from DFS that may on balance raise more concerns than it assuages.
“Although sales are nothing to shout about, this is a particularly tough market and one that DFS is probably better placed to ride out than many peers.
“The collapse of Feather & Black, Multiyork – whose assets DFS has snapped up, and lately Warren Evans suggests both the severe pressure on the market and the opportunity for those with enough scale to ride it out.”