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Branded ranges boost DFS

DFSCLivingSales of branded upholstery ranges have risen by 35% in the past year at DFS, helping the chain to record profits but it has warned exchange rates will hit profits.

‘Our ranges of exclusive brands have performed well ahead of expectations, with a 35% increase in total sales orders over the year as a whole. Highlights included the introduction of a number of new models under the House Beautiful brand, and the continued outstanding success of the French Connection Zinc range. Our close supplier relationships and vertical integration insights have enabled us to introduce a seven-day express delivery option across the Zinc sofa range. We extended our partnership agreements with French Connection, House Beautiful and Country Living during the year, and are also achieving encouraging results from the sale of sofas from our own Sofa Workshop Dillon and Ellie ranges through DFS stores,’ says Ian Filby, DFS ceo.
Sales rose by 7.4% to £980.4m, with underlying EBITDA up 5.8% to £94.4m in the year to 30 July.
The roll-out of Dwell stores within DFS branches, which uses space previously used as warehousing, has been delivering higher sales and profits as well as boosting core DFS sales at those branches. It plans to increase the number from 12 to about 40.
‘Gross profit has continued to increase at a faster rate than revenue, up 9.9% to £134.3. This reflects a small improvement in gross margin on goods sold, consistent with our previous guidance that planned investments in price points is now complete. We also continue to benefit from the spreading of our marketing costs over a wider revenue base as the business continues to grow,’ says Nicola Bancroft, DFS cfo.
‘Currently prevailing US Dollar and Euro foreign exchange rates, particularly the US Dollar which is the currency denomination in which we purchase cUS$120 million annually of finished goods, present us with some challenges in sustaining this progress. Active management of our sourcing, cost base and range mix will, we believe, already offset approximately two thirds of the gross impact in the financial year, with a £4 million adverse net impact remaining to be addressed. We continue to work to seek to offset the remainder of the impact within the financial year. Looking further ahead, the actions we are taking together with the scale of our operations, geographical mix of our sourcing and our significant UK own-manufacturing capability provide us with significant advantages compared to many other retailers in our sector.’