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Trading statements

DFS warns of lower-than-forecast earnings

15 June 2017 07:17

DFS Furniture has warned that full-year earnings are likely to be below market forecasts after a a greater-than-expected weakening in the trading environment.

In the group's half year results announcement on 30 March, it highlighted the expectation of a softer market environment in the second half of its financial year.

An update today said: "The trading environment has however recently weakened beyond our expectation, with significant declines in store footfall leading to a material reduction in customer orders.

"We believe these demand effects are market-wide, in line with industry indicators, and are linked to customer uncertainty regarding the general election and the uncertain macroeconomic environment.

"As stated previously, the upholstery market does see short-term demand fluctuations from time-to-time, within an overall historical trend of long-term growth.

"Driven by these short-term revenue effects, we therefore now anticipate EBITDA over the full year to be lower than market expectations for the current year, and in the range of £82m-£87m.

"Notwithstanding this, we have maintained our investment in the business and we are confident that we will outperform the market over the longer term, driven by our scale, business model and proven growth levers.

"We believe our expectations for the next financial year are realistic based on consumer confidence remaining broadly in line with current levels, given its consequent impact on upholstery demand.

"We expect continued strong cash generation that has allowed the recent announcement of a £20m special dividend in addition to our ordinary dividend."

DFS said a further trading update would be given on 10 August, following the completion of its financial year.

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