Lockdown sales give big boost for DFS Furniture

DFS Furniture said it has seen a strong start to its financial year as customers in the UK are prioritising investment in the homes they were confined to for months.

In the past six weeks, the furniture retailer has received orders for £70m more than during the same period last year, it said yesterday.

The results, which are well ahead of what the company was expecting, will add to its already strong order book, which DFS believes will result in a further in-year revenue benefit of £100m.

“We believe that this trading performance reflects a combination of consumers currently spending more on their homes relative to other sectors, latent demand caused by the nationwide lockdown and also a strengthening advantage from our hybrid digital and physical retail offering, which is particularly relevant in this consumer environment,” DFS said in a statement.

Its shares soared 13% in early trading yesterday.

The company added that there could still be some risks, citing uncertainty around the coronavirus and Brexit.

“The financial year has started strongly.

“However, we do note that significant uncertainty related to Covid-19 on UK consumer confidence and the potential impact of Brexit exists and it is exceptionally difficult to assess the outlook beyond the short term,” it said.

“While positive trading momentum currently remains, we do note that some consumers may be bringing forward spending decisions and this may impact trading later in the financial year.”

The business added that despite these risks, its momentum means that earnings are more resilient and the company has more financial headroom.

It is also “well-positioned to capitalise on opportunities as its markets recover”, the board said.

In a broker’s note Shore Capital said: “Time will tell how this all pans out, but against a pretty gloomy macroeconomic narrative on the UK economy, and the consumer segments in particular, noting July GfK NOP consumer confidence stuck at the minus 27 level.

“Whilst so, it would be a mistake to us to suggest that all categories and segments are experiencing a tough time at present.

“Non-discretionary, for example the grocers, are experiencing strong trading, as are the domestic motor dealers.

“DFS, therefore, underscores the increased current expenditure on the home, and gardens we would suggest, alongside robust online activity.

“These are the positive forces emerging from the coronavirus impacted consumer economy.”