Sofa chain DFS takes hit to profit after Covid hammers supply chain
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Profit at DFS has dipped as the sofa maker pointed to Covid-related supply chain challenges.
Profit before tax stood at £21.6m, in comparison to £72.1m the prior year, a 70 per cent loss.
However, profit was up 35.8 per cent compared to the furniture maker’s pre-pandemic comparator of £15.9m.
The pandemic had squeezed DFS’ supply chain to the tune of a £21m hit to net margin and operating costs.
Revenue was down two per cent to £ 561.1m versus £572.6m in the comparable period in 2021, in interim results for the 26 week period ended 26 December 2021.
Revenue rose 15 per cent compared to its pre-pandemic comparable.
Tim Stacey, group chief executive officer said the company had delivered “market share gains and strong revenue growth on the pre-pandemic comparators.”
“This was in spite of significant logistics and supply chain challenges,” he added.
Stacey said the firm’s expectations for total profit across the 2022 and 2023 financial years remained unchanged, thanks to “strong trading” at the moment.
However, DFS was narrowing its scenario range for the current year “ to recognise that manufacturing and logistics disruption may affect the second-half throughput.”
The company’s “resilient order bank should mean any such in-year disruption will cause profits to shift into the next 2023 financial year reporting period,” Stacey said.
“Trading across the second-half to date has started strongly, again emphasising the increased scale of the business and demonstrating the success of our approach to mitigating the impact of inflationary pressures on our profit expectations,” he added.
Shareholders will be rewarded with a special capital return that will deliver a total return of approximately £80m over a twelve month period.
Last autumn, activist fund Gatemore Capital management bought a stake in DFS and told its fund investors the company was undervalued by public markets and vulnerable to a private equity buyout.