Continuing signs of life in sofa seller DFS (DFS), with full year results confirming strong recent trading, helped lift its shares

For the 52 weeks ended 28 June 2020, pre-tax losses were £74.9 million compared with a profit of £22.4 million year-on-year as revenue slipped to £724 million from £901 million.

The fall in revenue was driven by the pause in trading during the Covid-19 lockdown, the company said.

DFS said it would not propose a final dividend, citing macroeconomic uncertainty.

Looking ahead, the company said the current year had started 'very strongly... with year-on-year order intake growth over the last twelve weeks.'

Barring no further lockdown impacts, the company said it looked forward to reporting a 'strong first half sales and profit performance, although the full year outcome will be dependent on the effects of the pandemic and Brexit on consumer confidence, the housing market and levels of employment.'


Jefferies analyst Andrew Wade commented: ‘The strong trading reported in July/August that saw us upgrade our FY21 estimates has continued.

‘Indeed, the last five weeks have seen the year-on-year order book outperformance build from £170 million to £226 million. This implies run-rate order book growth of >50% in recent weeks, boosted by weather-assisted August Bank Holiday trading.’

Wade added that even based on a company base case scenario, factoring in macro-economic headwinds, pull-forward spending and an earlier Christmas delivery cut-off due to capacity constraints (implying a 15% drop in revenue through the remainder of the year against the same period 12 months ago) he still needed to upgrade his June 2021 profit forecast by 30%.

His counterpart at Shore Capital, Greg Lawless, said: ‘In our view, this is an upbeat statement from DFS. We like the fact that the company can leverage its market leading position, vertical integration and has self help levers to grow the business.’


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Issue Date: 24 Sep 2020