DFS Furniture sales fall, however remain optimistic regardless of political complications

DFS Furniture sales fall, however remain optimistic regardless of political complications

DFS Furniture (LON:DFS) have seen their shares in red as the firm gave shareholders a modest update which saw their sales fall.

Shares in DFS dipped 0.36% on Tuesday morning to 279p. 14/1/20 11:45BST.

The firm said that interim sales fell, however they reiterated the fact that they expect full year results to be in line with expectations.

The optimism provided was due to a recent uptick in order intake momentum, which will drive results.

In the 26 weeks period, which ended on December 19 the firm saw gross sales fall 26% from a comparative figure in a similar period.

The firm blamed the decline on a challenging consumer environment, which saw slumps in both August and September.

DFS did not update the market which actual sales figure for the periods mentioned, however they did report a fall which will concern shareholders.

The company said forecast profit before tax and brand amortisation for the financial year ending June 28 remains in line with market expectations at £51.2 million, up from £50.2 million in financial 2019.

DFS alluded to the wider economic and political complications which are currently haunting British retail, joining firms such as Asda who are owned by Walmart (NYSE:WMT).

DFS said “We are mindful of the broader political and economic uncertainty that still exists. However, we have made good progress on our strategic initiatives, driving showroom conversion and online growth. Furthermore, we have appropriate cost saving actions in place to help mitigate continued market weakness.”

“It is worth reiterating that the Group has historically capitalized on adverse trading conditions to buildmarket position and we continue to believe that our cash generation and long-term growth prospects will drive attractive returns for our shareholders.”

The Group will announce its interim results for the period ending 29 December 2019 on 10 March 2020.

Competitors see mixed results

London listed Dunelm (LON:DNLM) have reported sales and margin growth in the second half of its financial year.

The firm alluded to strong growth across the total retail system, as such total sales growth including new stores was 6.2% higher in the second quarter.

The company also impressively noted that gross margin improve by 110 basis points in the second quarter, mainly due to sourcing gains and lower product markdowns. Margin improvements were made across all product categories, Dunelm said.

The FTSE 250 constituent expects pretax profit for the first half to total £83 million after adjusting for the impact of the new accounting standard IFRS 16. In the first half of financial 2019, Dunelm’s pretax profit was £70 million.

The company added that the regulation of IFRS 16 reduced pretax profit by £1.3 million in the first half of financial 20.

Another competitor in Laura Ashley (LON:ALY) who also provide homeware have struggled over the last few months.

The homeware and clothing retailer said that, for the 52 weeks to 30 June, statutory loss before tax amounted to £14.3 million.

The primary causes for the year-on-year drop in profit are the underperformance of Home Furnishing and its website after a re-platforming exercise last November.

Total like-for-like retail sales were down 3.5%, whilst total group sales reached £232.5 million, down from the £257.2 million figure recorded for 2018.

DFS are not the only firm that have been hit by a slipping retail market, however shareholders will hope that the firm can come to a resolution to fight market slumps and make 2020 a successful trading year.