DFS bounces back from lockdown profit hit on Covid sofa rush

DFS today said locked-down shoppers spending more on their homes had helped the company bounce back after a suffering huge losses.

The sofa seller posted a £56.8 million loss in the year to June 28, down from a £28.2 million profit the year before while revenues slumped by £271.7 million to £724.5 million in the period. All of its stores were shut in lockdown, denting revenues while a squeeze on margins and a restructuring hit profits.

However, the company said its current financial year had begun “very strongly”. The operator of the DFS and Sofology brands has reopened all of its stores and its online arm is growing. The retailer forecast £226 million of additional revenues this year, as it boasts a strong order book.

Chief executive Tim Stacey said: “We believe that this growth is due to a combination of pent up demand from lockdown, consumers spending relatively more on their homes and the strength of the DFS and Sofology propositions in particular.”

In a Buy note entitled “armchair supporters”, Peel Hunt analyst Jonathan Pritchard predicted a “stand-out” year for the retailer.

He added: “DFS has enjoyed another strong month of trading since the last update. Customers are continuing to trade up, a nod to the stronger ranges across the DFS group.”

The retailer’s recent improvement is a marked contrast to the woes engulfing many High Street chains as the Covid recession costs thousands of jobs. However, food and home improvement retailers have seen a step up in trade since the start of the pandemic as restaurant trade switched to the supermarkets and Britons focused on doing up their homes.

DFS is also thought to have benefitted from sofa-bound consumers watching more television rather than going out since the virus emerged.

DFS last month agreed to sell The Sofa Workshop, one of its premium brands. The retailer said one of its subsidiaries has agreed a £300,000 disposal of The Sofa Workshop to luxury furniture group Halo Furnishings.

It comes seven years after it first bought the business. The Sofa Workshop has London sites in Tottenham Court Road, Battersea and Chiswick, as well as number of shops in the home counties.