The credit ratings of potential customers is holding back sales growth at DFS, the chain has revealed. Two-thirds of the 85 store chain’s sales are on credit and Ian Filby, DFS chief executive says consumers are looking to trade up.
The demand is higher than we’re able to fulfil. Numbers of customers using interest free credit are holding pretty steady, but inevitably, our finance houses have to make sure the people they bring in to nought per cent deals are people with good financial track records. They have to be confident in terms of a three-to-four year picture.’
The company says that adjusted earnings before interest, tax, depreciation and amortisation rose by 11.4% to £80m in the year to 31 July – the first year since Advent International bought DFS from Lord Kirkham – but sales fell by 2.2% to £638m.
‘Interestingly, our average order values have been going up, which suggests if consumers have decided to make a significant purchase, they are looking for quality and longevity,’ says Filby.