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(Alliance News) - DFS Furniture PLC shares tumbled on Thursday, after the firm reported a disappointing annual performance, in a year plagued with operational challenges.
In the 52 weeks to June 26, the Doncaster, South Yorkshire-based soft furnishings retailer said revenue grew 8.5% to GBP1.15 billion from GBP1.06 billion a year before.
DFS noted the two years before saw unprecedented demand due to Covid lockdowns. Against a pre-pandemic comparator of financial 2019, revenue was up 15% on a pro-forma basis, reflecting market share gains and increased average order values.
However, pretax profit shrank to GBP58.5 million from GBP102.6 million.
"This has been the most operationally challenging year that we can remember with industry-wide Covid-related supply chain issues, double-digit cost inflation on raw materials and ongoing colleague absence and skill shortages," lamented Chief Executive Officer Tim Stacey.
Shares in DFS fell 14% to 117.40 pence each in London on Thursday morning. The stock is down 52% in 2022 so far.
Looking ahead, DFS said the environment remains challenging, with orders softening in the final quarter of the financial year into first quarter of the next, as the cost-of-living crisis hit consumer sentiment.
It predicts an outturn for profit before tax and brand amortisation of between GBP20 million and GBP54 million, should average market order volumes decline by between 15% and 5% compared to pre-pandemic levels.
Despite the tough year, DFS proposed a GBP10 million extension of its current GBP25 million share buyback programme, along with a final dividend of 3.7 pence. This brings the full year total to 7.4p, slightly lower than the 7.5p payout the year before.
"In previous challenging environments DFS has performed resiliently and strengthened its market position, by leveraging its fundamental strengths in brand equity, manufacturer access, store sales densities, scale of operations and flexible cost base. In the face of the current slowdown in the market, I am confident that we will emerge stronger," Stacey added.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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