FURNITURE retailer DFS is expected to create around 200 jobs over the next financial year, as the Yorkshire-based business reaches out to more customers around the UK.
Over the last financial year, DFS hired around 500 manufacturing and retail staff as it opened stores in places such as Huddersfield and Sheffield.
In the year ended July 28 2012, sales fell by 2.1 per cent to £624.7m. However, the company’s earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 2.5 per cent to £82m, after a £5.9m expense to fund retail and manufacturing expansion.
The company said its growth strategy remained on track, after it opened 13 stores in the last financial year. DFS established its first city centre store in Tottenham Court Road, London, and the company also opened its first store outside the UK in Dublin.
Ian Filby, the company’s chief executive, said yesterday: “We are pleased to have delivered a good result for the year, despite the tough trading environment.
“As we expected, the improving trend in performance during the year continued in the fourth quarter.
“Sales increased 6.6 per cent in the second half of the year recovering from a decrease of 10.3 per cent in the first half.
“This performance benefited from a growing sales contribution from our new stores, which also began to contribute to profit.
“Improved margins over the year as a whole reflected the increase in our own manufacturing capacity, and our drive to improve efficiency across the business, particularly through more cost-effective media buying.”
Mr Filby highlighted the fact that the company had achieved a record EBITDA, despite the impact of a £5.9m non-recurring investment.
This was made up of £5m in new store re-opening and launch costs, and £500,000 associated with the expansion of its UK manufacturing capacity. The company added further production shifts at two of its factories and also spent £400,000 improving its website.
Mr Filby said that the new stores were performing well.
He added: “Since the beginning of our new financial year we have opened one further new store and our expansion plan is firmly on track as we develop our future store opening pipeline, while also enhancing our successful and growing online business.
“The group has remained strongly cash generative with free cash flow in the year to £36m. This has allowed the company to use £47.9m to buy back bonds and pay a dividend to shareholders. As a result, cash balances at the end of the year were strong, totalling £27m (compared with £38.9m the year before). Our net debt at the year end was reduced to £159.6m, from £182.2m in 2011.
“We are delighted that we are creating 500 jobs through our retail and manufacturing expansion, and have been pleased by strong demand for these positions. The strength of our performance, under exceptionally testing market conditions, is a testament to the hard work and commitment of the whole DFS team.
“We remain confident in the future prospects for DFS, based on our clear strategy, excellent products and outstanding people, and our expanding store and online presence.”
Altogether, DFS has 93 stores and employs 3,000 staff. Mr Filby confirmed that the company expected to create around 200 jobs over the next financial year as it opens more stores, although he couldn’t reveal their locations.
Last month, Mr Filby told a Yorkshire Post Business Club event that the internet was transforming the way we shop.
He told the audience of leading business figures: “Five years ago our customers would come to our stores and that was their first experience of what our range was. Now at least 80 per cent of our customers know what our range is because they’ve been on the net first. The future of retailing is increasingly going to be about people browsing the net, looking at their iPad, looking at an app, before coming into store.”
Lord Graham Kirkham, the adopted son of a miner, founded DFS in a former billiard hall in Doncaster 41 years ago. He went on to float the business in 1993 before taking it private in 2004 for £507m. Lord Kirkham sold DFS to private equity firm Advent International in April 2010, in a deal believed to be worth around £500m.