Oof, 2017 wasn’t a great one for the sofa retailer. Starting at £2.27, it actually did quite well in the first few months of the year, ascending to a 7 month high of £2.85 in early May. However, things went seriously wrong from then on, with a profit-warning in mid-June wiping out 20% of value in a single session. A brief rebound in late summer didn’t last long, as DFS eventually closed out the year 14% lower at £1.95.
Things have only gone from bad to worse in 2018. Quick rise to £2.10 aside it’s been in a pretty awful state, falling to an all-time low of £1.72 in late March. DFS Furniture PLC now sits at a current trading price of £1.73.
The company’s half year update in February was a mixed-to-negative bag of data. Group sales for the 26 weeks to 27th January actually rose 4.0% as DFS benefited from the acquisition from smaller rival Sofology, which itself saw a 13% in gross sales between 2016 and 2017. However, strip away that bit of M&A jiggery pokery and the firm’s sales actually fell 3.5%, though interestingly they were up 3.3% when measured over 2 years. It didn’t provide any like-for-like figures.
As for its outlook, DFS claimed that ‘the living room furniture market is likely to remain challenging in 2018, given current consumer confidence levels’. Yet crucially the company is still expecting ‘modest growth’ in EBITDA, something that investors will be looking for signs of in Wednesday’s interim results.
How the market reacts on Wednesday may be dependent on whether or not investors feel all the bad news has been priced in, itself something that will be informed by the kind of guidance DFS provides for the second half of the year.
DFS Furniture PLC (LON:DFSD) has a consensus rating of ‘Hold’ alongside an average target price of £2.13.
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