DFS disappoints against other big ticket retailers
While DFS has recorded a fifth consecutive year of group revenue growth, its difficult second half nearly counterbalanced its robust first half performance, as weak consumer confidence discouraged customers from making big ticket purchases. Also, as CPI inflation growth has outpaced increases in earnings since February 2017, many shoppers were unwilling to make big ticket purchases such as upholstery.
This -4% decline is roughly in line with figures released by ScS yesterday, where like-for-like order uptake fell by 5.0% over the same period. However, there have been some positive performances among the major upholstery players. Indeed, the business DFS recently acquired, Sofology, increased sales by 5% for the first six months of 2017. IKEA has also improved in living room seating as well in the first half of 2017.
These results are also disappointing in the context of other big ticket retailers. Carpetright achieved UK like-for-like growth in the 19 weeks to June 10, 2017 and sales at Travis Perkins’s Consumer division, which is predominantly Wickes, grew by 7.3% for the first six months of 2017, supported by kitchen and bathroom. IKEA has increased overall furniture sales between January and June 2017.
With revenue from Sofology being recognised within DFS’ turnover in 2017/18, as with Dwell and Sofa Workshop when they were acquired, DFS will consolidate its position atop the upholstery market. However, with the lower levels of orders so far in 2017, customers’ spending power remaining under pressure and a strong comparative, DFS will struggle to grow through its core offer.
Source: GlobalData, 10th August 2017