DFS Furniture says full-year profit before tax to be within upper half of market consensus

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DFS Furniture PLC (LON:DFS) has said its full-year profit before tax is expected to be within the upper half of the current market consensus range of £82mln-£118mln.

In the year to June 28, 2020, the sofa retailer posted an £81mln loss before tax.

READ: DFS says new England lockdown not expected to impact profits

The firm said it is assuming that its order intake will drop by 15% in the second half of the year, while any improvement in performance may be reflected in the first half of the next financial year because manufacturing operations are running close to capacity and port delays appear likely to persist.

DFS said it has currently closed 52 showrooms in England, seven in Wales and six in the Netherlands out of its 212-strong group estate in line with local governments’ coronavirus (COVID-19) restrictions.

Gross sales increased by 19% in the 24 weeks to December 15, it added, with online gross sales soaring by 76% compared to the same period last year.

This was due to strong order intake growth during the first quarter, offset by disruption at The Port of Felixstowe and raw materials supply issues relating to foam availability in Europe, DFS dsaid.

In the first 11 weeks of the second quarter, order intake fell by 5% due to showroom closures, though DFS said it is achieving market share gains and benefiting from a shift in consumer spending towards the home.

Net debt at half-year-end on December 27, 2020, is expected to be £40mln-£50mln, down from £115mln at the start of the financial year.

“The evidence is that underlying demand in the industry is extremely strong,” analysts at house broker Peel Hunt commented.

“Of the company’s 212 showrooms, 65 are closed at the moment and will stay so until the end of the month at the earliest: that is clearly very inconvenient given the importance of the Boxing Day sale, but we would imagine that the majority of intended purchases will simply be delayed, as opposed to cancelled (and maybe more sitting down than usual over Christmas will prompt even more sales?).”

Shares jumped 9% to 228.5p on Tuesday morning.

–Adds analyst comment, shares–

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