Coronavirus: DFS warns of footfall drop as profit slumps
Sofa retailer DFS warned that coronavirus has caused a slump in footfall at its showrooms as it reported a dive in profit at the end of last year.
The figures
Gross sales fell 5.8 per cent to £629.7m, and revenue fell 5.7 per cent to £488m in the 26 weeks ended 29 December.
Profit before tax dropped 17.5 per cent from £38m to £20.5m, while basic underlying earnings per share before IFRS 16 almost halved from 13.9p to 7.4p.
The retailer’s net debt increased from £158.1m to £160.4m.
Why it is interesting
DFS blamed its disappointing trading performance in the period on a drop in footfall due to political uncertainty and a slump in shopper sentiment.
The sofa retailer said its trading performance in the first half of the financial year reflected the strength of the previous year and the “challenges of a market environment that saw political uncertainty and low consumer confidence levels feeding through into lower footfall”.
This morning the firm said that it can not give guidance on full-year results due to coronavirus, which has impacted supply chains. Footfall has also dropped off at the company’s showrooms in recent days due to the outbreak, and DFS warned it could hurt trading over Easter and the May bank holidays.
What DFS said
Group chief executive Tim Stacey said: “Trading in the second half for the Group has also started satisfactorily with performance in the DFS brand particularly encouraging, with order intake growth year-on-year and good gross margins.
However, given the uncertainty as to how the current COVID-19 situation will develop it is not possible to give guidance with any certainty for the full-year out-turn. At present we believe our supply chain position should normalise before the financial year end, and it is only in very recent days that we have observed any change in consumer footfall to our showrooms.
While any disruption to order intake over the key trading periods of Easter and the May Bank Holidays is likely to impact our financial year 2020 results, it is reasonable to believe this may ultimately be transitory in nature; following periods of subdued demand we typically see much of that latent demand returning.
Notwithstanding the uncertain short-term outlook, we remain confident in the Group’s financial strength and relative track record of performance in all environments. Furthermore, we believe our leading market position will allow us to drive long term attractive value creation for our shareholders.”