DFS Furniture warns of possible coronavirus hit

The Doncaster-based firm said recent orders have been positive and it is only within recent days that it has seen any impact on consumer footfall to its showrooms.

The group said that given the uncertainty as to how the current COVID-19 situation will develop, it is not possible to give guidance with any certainty for the full year outcome.

It said that any disruption to order intake over the key Easter and May Bank Holiday trading periods is likely to impact upon its performance for the 2020 financial year.

DFS’ CEO Tim Stacey said the group has seen footfall fall by around 6 per cent over the past five days.

“If you watch what’s happening in Italy and what might happen in the next 16 weeks here - which is the 16 weeks until our financial year end in June - it’s about how the virus evolves. It’s super early in terms of what might happen,” he said.

“Easter is a strong time for us and the May Day bank holiday, so looking forward, we don’t know what level of disruption there might be in this country. Hopefully there won’t be, but you don’t know.”

He said the group has a very strong online business, which accounts for 20 per cent of sales.

“Online might benefit if people are sitting at home,” said Mr Stacey.

“Our experience tells us - for example in 2018 when we had the really warm summer and warm spring - we did see a prolonged period of footfall being down and orders being down, but interestingly, we saw it bounce back very quickly in the autumn.

“So, over the whole of 2018, we were actually up year on year at DFS so I think it’s a transitory thing. We expect that however long the virus lasts and impacts the UK, one would hope that trade would come back and our experience suggests that it does.”

He said the group had a very good period from Boxing Day through to early March when trading was up year on year in terms of sales.

“If you look at the underlying macroeconomic indicators in the UK, in January and February in terms of housing transactions and consumer confidence, it was actually improving,” he said.

“It’s trying to put things in perspective in the sense that our business is in good underlying health. We’re really pleased with how the DFS business is performing. It’s so uncertain in terms of what’s going to happen.”

He said the group’s first priority is protecting the health of its workforce.

“We are a big employer in Yorkshire. Our most important thing is the well-being of our people and the health of our people.

“The number one priority is to do the right thing by our people and that’s following all the latest Government advice and guidance and the Public Health England guidance, which we’re doing. We just don’t know what’s going to happen to the consumer.”

He predicted that the group will bounce back after the outbreak.

“We’re ready. We are a very strong business. We’ve got a high market share, big scale and we generate a lot of profit and cash. We’ve got good head room with all of our banks in terms of facilities,” he said.

“We’ve ridden through ups and downs in the 50 years we’ve been in existence and we’ll power through again.”

The company said sales slipped 6 per cent to £488m in the six months to December 29, due to the impact of political uncertainty and weaker consumer confidence. Underlying pre-tax profits for the half year fell to £20.5m from £38m.