DFS Furniture (LON: DFS), the UK’s largest retailer of sofas and other upholstered furniture, said demand softened further over the past seven weeks and that full-year profit expectations now carry a wider range of potential outcomes. The shares fell after the update, which landed before the market opened today.
The shares were 127.5p at 8.45am on a delayed quote, down 4.85% from yesterday’s close of 134p. They have traded between 120p and 128p today, and sit more than a third below the January high of 204p and 13% above the March low of 113p.
The trading statement covers the 19 weeks to the 8th of November and was released at 7am ahead of the company’s annual general meeting later today. At full-year results on the 24th of September, DFS had reported order intake, the value of orders placed by customers, down 2.5% over the first 12 weeks of the year, in line with expectations.
Since then, the company said, upholstery demand has weakened further, reflecting pressure on household budgets and lower consumer confidence. It gave no order figure for the latest seven weeks.
Management did not cut a number. Instead it said that, against fluctuating footfall, fragile consumer confidence and the early stage of its financial year, profit expectations “naturally carry a wider range of potential outcomes”. That is softer than a formal downgrade, but a wider range means less certainty over the result, and no profit figure was given to measure it against.
DFS argues the weakness is sector-wide. Proprietary banking data from Lloyds covering 14 specialist upholstery retailers shows DFS and Sofology, its second core brand, continuing to outperform the wider sector. Chief Executive Tim Stacey said:
While the consumer environment has remained challenging through the autumn, DFS is well placed within it as the clear market leader with unmatched scale, brand resonance and operational strength.
Tim Stacey, DFS Furniture
DFS is investing in promotions to lift conversion into Black Friday and its Winter Sale while keeping tight control of costs. The next update, the half-year trading statement, is due on the 21st of January.