DFS Furniture PLC saw its shares dive in early trading on Thursday as the furniture retailer reported a big drop in full-year profit despite an uptick in revenue.
The furniture retailer saw its reported pretax profits sink by 43% to £58.5mln in the 52 weeks to June 26, 2022, down from £102.6mln a year earlier, while its basic earnings per share dropped by 64% to 12.3p from 34.5p.
The company did report sales growth of 8.5% to £1.15bn on a strong order bank entering the year, as well as a double-digit order intake increase across both brands driven by market share gain in DFS and new showroom openings in Sofology.
It also partly attributed the rise in revenue to rolling out its store transformation programme in 47 stores. The company noted that its online mix of 22.7% was well ahead of pre-pandemic times but similar to last year’s levels that were impacted by lockdowns.
DFS said it overcame unprecedented COVID 19-related supply chain problems, which particularly impacted operational and financial performance in the first half.
"This has been the most operationally challenging year that we can remember with industry-wide Covid-related supply chain issues, double-digit cost inflation on raw materials and ongoing colleague absence and skill shortages,” Tim Stacey, DFS chief executive, commented in the results statement.
The company said its board has proposed the extension of its £25mln share buyback programme by an additional £10mln and declared a final dividend of 3.7p per share for the full year 2022.
This means over £75mln of excess capital is expected to be returned to shareholders via ordinary and special distributions this calendar year.
DFS also touched upon the opening of seven new Sofology showrooms with another two openings planned for the full year 2023, which is expected to drive extra upholstery market share gain.
The outlook for the next financial year is blurry, however, with it likely to be even more difficult for DFS.
Stacey said: “Looking forward, the UK furniture market continues to be challenging and the outlook for the sector remains uncertain given the macroeconomic environment. From the fourth quarter of the year, we saw a reduction in the volume of orders.”
DFS shares nosedived 13% to 118.7p in early morning trade.