DFS plans expansion

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Sofa specialist DFS said it will open 12 new stores this year creating 500 jobs despite a fall in half year sales and profits.

The Doncaster-based group said sales fell 11 per cent to £296.8m in the six months to January 28 while earnings fell 31 per cent to £28.3m.

The expansion plans will include the opening of the first DFS store in Dublin this Easter.

DFS chief executive Ian Filby said: “We have continued our programme of substantial investment in the future of DFS, opening eight new

stores during the first half and significantly expanding our UK manufacturing capacity. We plan to open at least 12 stores in total by the end of our financial year. Our expansion will create in total 500 new British retail and manufacturing jobs.”

He said the UK retail trading environment has remained challenging, although the group’s sales performance in the second quarter was better than in the first three months of the financial year.

The pre-opening and launch costs of the eight new stores reduced earnings by £2.6m during the first half.

There was a further £500,000 expense associated with the expansion of the group’s UK manufacturing capacity by adding additional production shifts at two factories.

“This investment in production is designed to improve our efficiency, increase margins and enhance customer service by shortening delivery lead times on a growing part of our product range,” said Mr Filby.

Thanks to strong cash generation the group was able to buy back £15.6m of bonds and paid a dividend to shareholders, at a combined cash cost of £28m.

The group has appointed Helen Normoyle to the newly created role of chief marketing officer.

Ms Normoyle, the former director of marketing and audiences at the BBC, will join the group in May,

Mr Filby said she will bring a wealth of high profile brand marketing experience.

Talking about future trading Mr Filby said: “Although we do not expect any easing of the difficult trading environment, we anticipate a continued improvement in the more encouraging trend in performance that became evident in the second quarter, with a growing sales contribution from our additional stores and factory capacity during the second half.”