14th Jul 2020 11:00
(Alliance News) - DFS Furniture PLC on Tuesday said that while it was performing in line with expectations until the lockdown in March, it expects to post a significant hit to its earnings due to Covid-19 disruption.
The sofa retailer said for the 52 weeks ended June 28, it expects to record revenue of around GBP725 million, down GBP271 million, about 20%, from GBP901.0 million posted for the 48 weeks to the end of June 2019.
It predicted a loss of between GBP56 million to GBP58 million - excluding restructuring and impairment costs from its planned restructuring of its Sofa Workshop and Dwell brands - due to the suspension of deliveries and operations from March 23. Pretax profit for financial 2019 was GBP22.4 million.
The company said it expects to recognise a charge of between GBP16 million to GBP18 million in financial 2020 in relation to the planned restructuring.
Looking ahead, DFS Furniture said since reopening, online order intake has been up 77% year-on-year from March 23 to July 12, with order intake in showrooms up 69% year-on-year from between June 1 and July 12.
"Our strong online platforms have served customers well throughout the lockdown and we have seen consistently high order intake, which I'm pleased to see has continued as our showrooms reopened. There is no doubt that consumer behaviours are changing fast and as such we are accelerating our omni-channel strategy through increased investment in technology right across the customer experience," said Chief Executive Tim Stacey.
The Doncaster-based company also expressed confidence in its outlook due to a "materially higher" opening order bank year-on-year, from which it expects to realise an incremental GBP100 million of revenues in the first half of financial 2021.
It added that it has taken actions to cut costs including headcount and marketing budgets. Retail business rates relief of around GBP19 million will be received in financial 2021.
Cash held as at the end of June were just over GBP160 million.
DFS added that it has identified the opportunity to grow its Sofology brand to around 70 showrooms and has agreed a twelve-month deferral of the opening dates of five previously secured new locations. It added that it is in advanced discussions on a number of these locations.
The stock was trading 1.0% higher at 156.60 pence each on Tuesday morning in London.
By Ife Taiwo; [email protected]
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