DFS aims to broaden appeal with Olympic deal

With less than five months to go before the Olympics start on August 5, the Doncaster-based furniture retailer said it sees significant potential to promote its brand with shoppers, leveraging the strong consumer appeal of Britain’s athletes.

DFS has been named Team GB’s chosen official homeware partner for the 2016 Olympics.

“While we are of course proud to support our nation’s athletes as they seek to build on the success they saw in London 2012, we believe that we will derive real operational benefits from this investment,” said DFS chief executive Ian Filby.

“We will be creating a home away from home for the British athletes in the Olympics village in Rio.”

He said that work with a number of athletes is already improving the group’s engagement with employees.

In addition, the athletes’ philosophy about how marginal gains in many areas can add up to a noticeable improvement in overall performance is improving the group’s service to customers.

“The partnership provides an excellent platform from which to fulfil our vision of taking DFS from being a great British business to a world class business,” said Mr Filby.

He was speaking as DFS announced record half-year results, reflecting growth initiatives and buoyancy in the furniture market. The FTSE 250 firm said gross sales rose 7 per cent to £461.3m in the six months to January 30 while earnings rose 12 per cent to £31m. The group made a pre-tax profit of £16.2m compared with a £14.4m loss a year earlier when the group booked flotation and expansion costs.

“After the credit crunch, the market went backwards, but now we’re seeing steady growth. Consumer confidence is back to pre-credit crunch levels and we’re seeing growth of around three per cent,” said Mr Filby.

He said that underlying like-for-like sales grew at four to five per cent.

“We are delighted with that. It’s in line with our plan. Like-for-like sales are above the market and we are spot on with good progress and good cash generation.”

DFS said its sub brands Sofa Workshop and Dwell put in a good performance while its start up, DFS Netherlands, also made an encouraging contribution to sales.

“We are seeing really good progress at Sofa Workshop and Dwell with double digit growth. We are really pleased with their contribution. We’ve started putting shops within shops,” said Mr Filby.

The group now has two stores in the Netherlands and will open a third in the summer and it believes the market has the potential for 15 stores.

DFS now has 110 stores and plans to open a further three to four each year.

A new initiative is “Swoosh”, online technology that allows customers to see what their sofa would look like in their chosen fabric and colour.

“We’ve got it in 50 per cent of stores. It’s very hard for customers to visualise their sofa from a swatch. We can take a product and say: ‘This is what it would look like in brown or cream’. It appears on the big screen. It’s retail theatre,” said Mr Filby.

The group has raised its interim dividend by 13 per cent to 3.5p.

“This is the third time post IPO that we’ve delivered what we said we’d do. We anticipate growing at 3 to 4 per cent,” said Mr Filby.

“The group enjoys excellent prospects to deliver long-term profitable growth, strong cash generation and a progressive dividend policy as one of the UK’s best-known brands, a major British manufacturer and the country’s leading retailer of upholstered furniture.”

DFS said that finance director Bill Barnes will retire in the summer after almost 13 years with the group.

Nicola Bancroft, who is currently commercial finance director, will become chief financial officer and an executive director from August 1.

SHARES in DFS Furniture fell 4.6 per cent despite the upbeat results after broker Numis cut its full year 2016 pre-tax profit forecast by £1m to £62.5m.

Numis homed in on CEO Ian Filby’s statement that it was not yet clear what the impact would be of the EU referendum and whether it would affect consumer confidence and sterling. Numis said given the uncertain outlook, it had reduced its forecast.

Mr Filby said the group had not seen any affect from the referendum.

“We know that things like the referendum and the General Election bring a few weeks of uncertainty and that tends to hold back consumer confidence, but people have confidence in their current income,” he said.