Top sofa retailer DFS is backing British

RETAILER DFS delivered a vote of confidence in UK manufacturing as it revealed that more than half of its sofas are now made in Britain.
Ian Filby, CEO of DFSIan Filby, CEO of DFS
Ian Filby, CEO of DFS

Ian Filby, chief executive, told the Yorkshire Post that manufacturing in the UK allows the make-to-order business to respond quicker to customer demand.

“I also just think that UK manufacturing has made itself more competitive in recent years,” he said.

Hide Ad
Hide Ad

“You can source product that has good lead-in times from factories that are well run with people who are well motivated to work hard and earn good money.”

He said DFS’ main factory, in Carcroft, near Doncaster, has added 120 skilled jobs in the last 18 months. It now employs nearly 300 people.

With its other two factories in Alfreton and Long Eaton in Derbyshire, DFS employs 800 people in UK manufacturing jobs.

The Doncaster-based business has substantially increased its UK production since 2010, when venture capital firm Advent took it private in a £500m deal. At the time, a fifth of DFS sofas were made in Britain.

Hide Ad
Hide Ad

The company introduced double shifts at its three UK factories last year, increasing UK production to 30 per cent of sales. With UK suppliers accounting for an another 17 per cent, DFS said more than half of its sofas are now made in Britain. The remainder are made in Europe and Asia.

The retailer yesterday reported sales of £481.8m in the nine months to April 27, an increase of 7.8 per cent on the same period last year. It said earnings before interest, tax, debt and amortisation rose 8.5 per cent to £48.3m.

DFS remains highly cash generative, said Mr Filby, with cash balances at the end of the third quarter at £15.4m after expenditure on bond refinancing and shareholder dividends totalling £36.9m.

The retailer invested £2.5m in expansion, which saw the opening of five new stores in the third quarter at locations in Thanet, Eastbourne, Bristol, Dudley and Stockton.

Hide Ad
Hide Ad

Like-for-like sales were not specified, but represented “low growth” and have remained steady over the last five quarters, said Mr Filby, who echoed the retail industry view that “flat is the new good” in like for like comparisons. Nevertheless, he described the retailer’s performance as “robust”, which underlined the strength of the brand, the success of his strategy to broaden appeal, enhance customer service and make products more accessible through new openings and multi-channel sales.

DFS has spent around £100m on advertising a year to strengthen its brand and has a share of around 27 per cent in the sofa market, towering over its nearest rival at 7 per cent, said Mr Filby.

He added that DFS is “almost generic” for sofas. “It’s a value for money proposition, but not to be confused with a budget proposition,” said Mr Filby.

Products cost from £300 to £3,000 and appeal to the whole spectrum of society, he added, ranging from young families looking for sofas to sustain five years of wear and tear to early empty-nesters, whose teenage children are heading off to university, and those who are looking to make a statement with a sofa that will last for 10 years.

Hide Ad
Hide Ad

Mr Filby, a former trading director at Boots, denied suggestions that he is trying to take the brand upmarket and said the company is focused on maintaining its traditional value base and widening its appeal to more aspirational customers through ranges like the trend-led Capsule collection.

Mr Filby said the economic environment and trading climate is difficult and predicted that the economy will be “trundle along hopefully the bottom” in 2013.

“If you had to point to a little bit of light recovery it may well come in early 2014,” he added, with some reservation.