Following today’s release of DFS’ figures for the 26 weeks ending 24 December 2023; Matt Walton, senior retail analyst at GlobalData, a leading data and analytics company, offers his view: “DFS has reiterated the challenging nature of big-ticket purchases towards the end of 2023 as it reported a 5.6% decline in gross sales in its H1 FY2023/24, with shoppers prioritising spend on Christmas and food over other non-essential products. This brittle consumer confidence is highlighted by figures from GlobalData’s Customer Sentiment tracker for December 2023, with over 45% of shoppers saying that now is a bad time to make big-ticket purchases. The upholstery market leader was also impacted by going up against a tough comparative with orders between October and December 2022 up 18.8%, the hotter weather in September and October 2023 stifling footfall, and the weak housing market, which has dented one of the furniture market’s main drivers.
“DFS has reduced its overall topline guidance for FY2023/24 to reflect this weaker demand, from between £1,060 and £1,080m to between £1,020 and £1,040m, as it forecasts that market volumes will fall by around 5% for the remainder of the year. Despite this dialling back of its sales forecast, the retailer has maintained its profit before tax guidance of £30-35m as topline declines are set to be counterbalanced by improved efficiencies, such as unlocking the remaining benefits of its Sofa Delivery Company offer and centralising and automating other processes. These efficiencies are expected to help its first half profits before tax be marginally ahead of last year’s £7.1m.
“Upholstery’s prospects will remain challenging for the first half of 2024, with DFS seeing order uptake during its Winter Sale period remaining consistent with its first half. Consumer sentiment is set to remain weak, with GlobalData’s December Consumer Sentiment Tracker showing that a net of 24.0% of consumers said that they intend to spend less on furniture & floorcoverings compared to more over the next six months, trailing only entertainment. These conditions make the retailer’s expansion into other furniture categories look especially prudent as it gives it access to more buoyant categories, such as bedroom furniture, and will encourage more frequent visits from shoppers in the future.”
