Profits drop at DFS in ‘challenging’ year despite strong fashion licenses
Living room furniture retailer DFS experienced a sharp drop in its annual profits after a “significant deterioration in the consumer market” impacted sales in the second half of the year.
The company recently signed a licensing deal with Joules to create the product for that brand's first foray into sofas but those products aren't yet available to lift it out of the gloom it endured during the latest half. It also works with French Connection and while it had little to say about that license on Thursday, last month the fashion firm said that the collaboration was performing well.
Meanwhile, DFS said the continued weakness of the pound against the dollar also contributed to its decrease in reported profit before tax. Profit for the 52 weeks ended 29 July sank 22.3% to £50.1 million, despite a 0.9% increase in revenue to £762.7 million.
DFS blamed the “very challenging” UK furniture market environment, but focused on highlighting the strategic progress it made during the year. In addition to signing a deal to acquire Sofology, the company partnered with British fashion brand joules on its first sofa collection, and opened three new large format stores in the UK and Ireland.
Meanwhile, omnichannel is proving to be an effective strategy, with strong double-digit growth in online revenue.
"We have continued to make good strategic progress across all our key areas of growth, while our financial performance reflects the current challenges of the UK furniture market. In particular we were delighted to announce the acquisition of Sofology and the exclusive licensing partnership with the British lifestyle brand Joules,” said CEO Ian Filby.
DFS’s results revealed on Thursday stand in stark contrast to Made.com’s, published earlier this week. The online furniture retailer reported a surge in sales for the year to 31 December 2016 and turned in a maiden UK profit of £49 million.
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