Summer heatwave hits DFS

The Doncaster-based firm said pre-tax profit fell 48.5 per cent to Â£25.8m in the year to July 28 after the summer heatwave hit sales in the fourth quarter.Underlying pre-tax profit before brand amortisation fell 23.7 per cent to Â£38.3m.The group's chief executive Ian Filby said: "Financial results for the year reflected the exceptional downturn in market demand we saw in the fourth quarter."We are pleased to note that the market has recovered since the start of the new financial year, with the group seeing like-for-like order growth across all brands over the first nine weeks."We believe, however, we are benefiting from deferred purchases in the prior financial year and overall we expect the market to remain subdued into 2019, constrained by political risk and weak consumer sentiment."Talking about the Brexit outcome, he said the group is well prepared for all eventualities."We encourage a situation where our borders remain as frictionless as possible," he said."We are well prepared. We don't have a perishable product life so a couple of days' delay would not be significant."He said it was encouraging to see sales pick up in August and September."It's always pleasing when what you anticipate happens. The hottest summer since 1976 saw people opting for barbecues, beaches and parks rather than retail parks," he said."It's a shame as the first nine months of the year was ahead of plan. The logic is a bounce back - which we have experienced."He said the group is well positioned to become stronger in the current environment, boosted by investment and acquisition benefits."We have excellent prospects for profitable growth and attractive cash flow generation over the longer term," he added.Revenue fell 2 per cent to Â£747.7m over the year after stripping out the benefit of acquisitions.Group revenue including acquisitions, such as Sofology, rose 14.1 per cent to Â£870.5m, while online sales jumped 15.1 per cent.Mr Filby said: "We are by far the market leader in online and we are close to a market share of 30 per cent."Over the last week the group has launched an Augmented Reality service that allows customers to walk into a room in their home and places a sofa of their choice in that room via their Apple iOS iPhones or iPads.The feature is on the DFS.co.uk website, meaning that customers don’t need to download an app, they can just use the function straight from the website. Ed Monk, associate director at Fidelity Personal Investing’s share dealing service, said: “DFS had forewarned of trouble in the homeware market and these results bear it out with pre-tax profit down 48.5 per cent. This time the long, hot summer has been blamed for keeping shoppers away from its outlets, but it is only the latest in a series of disappointing updates.“Elsewhere in the results, a 15 per cent jump in online sales was a highlight, although the company laid out a catalogue of risks it faces from Brexit, including border delays and more regulation.“As a market leader DFS is well-placed to capitalise in a disrupted market and recent acquisitions should improve trading fundamentals. Today’s results show investors may have to patient.”Earlier this year, DFS said its long standing chief executive Ian Filby is to retire after eight years at the helm and will be succeeded by chief operating officer Tim Stacey. Mr Filby will step down as chief executive and from the board of directors on October 31. DFS said Mr Stacey will take over as CEO on November 1 following a six month handover period to ensure a smooth transition. Mr Filby described Mr Stacey as "a great right hand man".Mr Filby will stay on as chairman of Sofology for a further year to ensure a smooth transition.