DFS expects fresh surge in demand when lockdown eases

Furniture company DFS is forecasting another release of pent-up demand in the coming months as lockdown eases.

The retailer said its profits more than quadrupled in the six months to the end of December.

Before tax, profit hit £72.1 million, up from £15.9 million a year earlier, on revenue of almost £573 million, up 17%.

A surge in demand in coming months would mirror the start of that period, when the country came out of its first lockdown.

The company’s growth in the first half of the financial year also continued throughout the period, with the order book currently £65 million ahead of where it was this time last year.

The Christmas 2020 order book was £200 million ahead of Christmas 2019, DFS added.

It has also benefited from a 2% increase in market share, controlling costs and more consumer spending on homewares as people remain stuck in their houses.

There is further potential for the company after Harveys called in administrators and Oak Furnitureland downsized, said Shore Capital Markets analysts Greg Lawless and Clive Black.

“In total, we think that up to 5% market share is up for grabs and, as a market leader, that DFS can win at least its fair share of this,” they said.

“In our view, this is as upbeat an outlook statement as we have seen from a retailer in a long time, highlighting pent-up demand once the showrooms reopen.”

The switch to online sales, which grew revenue by 66% in the first half, is also lowering marketing costs through digital ads, and seeing property and labour costs fall, the analysts said.

DFS chief executive Tim Stacey said: “Our business has proven to be resilient throughout the period despite showroom closures and a significant amount of external disruption in our supply chains.

“The investments we’ve made in our digital channels have generated exceptional revenue growth.”

The business expects pre-tax profit to hit around £105 million this financial year.