Shares in furniture specialist DFS Furniture (DFS) surged 15% to 172.4p on Tuesday after the firm posted a strong trading update.
Trading in the last six-weeks was particularly brisk with order intake equivalent to around £70 million in revenues, 'significantly ahead' of management expectations and in addition to the previously announced strong opening order book with an incremental benefit of £100 million of revenues.
While trying not to get too carried away, the company offered up three factors driving the better than expected performance: consumers spending proportionately more on their homes than in other sectors of the economy; latent demand caused by lockdown; and a strengthening advantage from the company’s hybrid digital and physical offering, which it sees as ‘particularly relevant’ in today's environment.
The firm admitted that some of the current momentum may be the result of consumers bringing forward their spending decisions, which could impact trading later in the financial year.
AJ Bell investment director Russ Mould concurred, noting ‘DFS has effectively had an early Christmas present and possibly seen a boost normally associated with Boxing Day and New Year sales.
‘A flare-up in coronavirus cases during the autumn and winter could potentially sustain the current sales momentum if people are encouraged to stay working from home, but one has to wonder if DFS has already seek its peak earnings season this year’.
Shore Capital retail guru Clive Black took a more positive stance, highlighting the scope for 2021 upgrades especially with DFS ‘more cautiously speaking of an increase in earnings resilience and a bolstering of its financial headroom’.
Black also pointed out that today’s announcement had positive read-across implications for other home related stocks. Fellow upholstery and flooring specialist ScS (SCS) saw its shares jump 5% to 185.5p.
