DFS has reported heavy losses during its latest annual results with the blame finger being pointed at shipping delays in the Red Sea and the impacts of higher interest rates on borrowing.
As well as constantly having a sale on, DFS are also trying to cram an extra week into a year it would seem. For the 53 weeks to 30 June, the furniture giant posted a pre-tax loss of £1.7m compared to a profit of £29.7m in the prior year. Sales fell 7.9% to £1.31bn, as the retailer saw a 1.8% year-on-year decline.
Looking ahead, DFS said its FY25 trading was in line with expectations, adding it remained confident in delivering its £1.4bn sales and 8% pre-tax profit targets.
DFS chief executive Tim Stacey said (management-speak klaxon activated): “Despite the challenges that the business has seen, we are optimistic for the future and see signs that market growth could soon return. We expect recent improvements in housing transaction data and strengthening consumer balance sheets to lead to increased upholstery market demand across the FY25 financial year. In addition, thanks to the success we have had growing our gross margin and improving our operational efficiency we expect to deliver profits in line with market consensus, weighted to the second half.”
In other high street news, H&M Group has posted flat sales in the UK and across key European markets in its third quarter as colder weather in June hit trading. For the three months to 31 August, the fashion giant saw global net sales slip 3% to £4.3bn from £4.5bn last year.
As a result, the group changed its outlook, and now expects operating margin for the year to be below 10%, down on its previous earnings targets.
H&M CEO Daniel Ervér said: “The quarter started with slow sales in June due to cold weather in many of our key European markets. In July and August we saw sales pick up, with even stronger sales development in September. Despite a challenging start, we are concluding the third quarter with sales on par with last year in local currencies and with good cost control.”
Ervér continued (klaxon sounding again): “2024 is a year in which we’re laying the foundation for future growth. We’re increasing the pace of improvements in our customer offering and deprioritising things that don’t strengthen our brands or contribute to our sales and profitability. Consumers’ living costs have remained high during the year, and at the same time we continue to see turbulence in the world around us. External factors have impacted our sales revenue and purchasing costs more than we expected. At present we estimate that this year’s operating margin will be lower than 10%.”
