DFS Furniture swings to full-year loss but forecasts profits next year

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DFS Furniture PLC (LON:DFS) revealed that it swung to a full-year loss as the coronavirus pandemic impacted but has guided for profits next year even in the worst-case scenario.

The sofa seller remains cautious on its short-term outlook amid concerns over lower consumer confidence and a potentially slower residential property market.

READ: DFS Furniture boasts strong summer trading

The group prepared three scenarios where revenues for the financial year ending in June 2021 would drop by 30%, 15% and remain flat to GBP959mln, GBP1bn and GBP1.1bn respectively.

The implied profit before tax would be GBP57mln, GBP94mln and GBP147mln, respectively, it said.

In the year to June 28, 2020, DFS’s revenues dropped by 20% to GBP724mln while the previous year’s underlying profit before tax of GBP28mln swung to a GBP56mln loss.

The retailer is not recommending a final dividend to respect the terms of a banking facility secured in April, though it would have skipped it anyway to maximise its financial position.

“Financial year 2021 is likely to be a stand-out year. The resultant stronger balance sheet will allow a strategic acceleration (expect 10 new Sofologys this year),” analysts at ‘house’ broker Peel Hunt noted.

“With market share being won anyway, the future is bright, backed up by an impressive ESG strategy,” they added.

DFS shares advanced 6% to 178.05p in early trade on Thursday.

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