Tuesday 11 December 2018

DFS warns over earnings after heatwave melts sales

The retailer said sales have been affected as the hot weather has put off customers, while orders from the Far East have also been delayed.

Sofa chain DFS has warned over full-year earnings after the recent heatwave dented sales and shipments of made-to-order products from the Far East were hit by delays (Nick Ansell/PA)
Sofa chain DFS has warned over full-year earnings after the recent heatwave dented sales and shipments of made-to-order products from the Far East were hit by delays (Nick Ansell/PA)

By Holly Williams, Press Association Deputy City Editor

Sofa chain DFS has warned over full-year earnings after the recent heatwave dented sales and shipments of made-to-order products from the Far East were hit by delays.

The retailer said it had seen “significantly” lower-than-expected orders in its fourth quarter so far as the hot weather put off customers over key trading weekends.

It also blamed “disruption outside of our control” to ships bringing orders from overseas suppliers.

DFS said total like-for-like sales in the core business were about 3% lower in the 23 weeks to July 7 and around 4% lower in the 49 weeks of the year so far.

We continue to expect that the furniture retail market will remain challenging over the next 12 months DFS

The group said that, while cost-cutting would help soften some of the blow, full-year underlying earnings were now expected to be lower than the £82.4 million reported the previous year.

It said: “We continue to expect that the furniture retail market will remain challenging over the next 12 months, given ongoing reduced consumer confidence levels, although we would expect some alleviation of current short-term demand effects.

“Our previous investments in our supply chain and the recent acquisition of Sofology, together with progress expected at Dwell and Sofa Workshop, will provide benefits to earnings that we expect to help mitigate the challenging sales environment.”

It is thought the issues with DFS’s Far East shipments relate to recent disruption at Felixstowe – the UK’s biggest container port, which has been thrown into turmoil after the troubled launch of a new terminal operating system.

This has been delaying deliveries to customers, which is when DFS records the sale in its books.

Shares in DFS were more than 3% lower after its profit alert.

But the message to investors from retail expert Jonathan Pritchard, at Peel Hunt, was “don’t panic”.

He said: “The weather, England’s World Cup run and issues at Felixstowe have combined to create a difficult set of trading conditions for home/big ticket retailers, and DFS is not immune.

“If DFS has a cold, we’d imagine that the competition are in retail hospital.

“DFS is in an enviable, market-leading position, tapping into a wide demographic and addressing the online issue as well.”

Press Association

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