DFS sees profits and sales drop amid supply chain disruption

Supply chain disruption contributed to a 70 per cent year-on-year decline in DFS profits in the six months ending 26 December. 

However, profits are still up 35.8 per cent compared to DFS’s pre-pandemic comparator of £15.9million. 

The company said it will dish out around £80million to shareholders for the year, and announced a share buyback of up to £25million to be completed over the next 12 months.

Impact: DFS saw its profit drop amid ongoing supply chain problems

Supply chain disruption and logistical problems affected the group in the form of a £21million hit to its net margin and operating costs. 

Tim Stacey, DFS chief executive, said: ‘We delivered a strong performance in the first half of the year, with market share gains and strong revenue growth on the pre-pandemic comparators. 

‘This was in spite of significant logistics and supply chain challenges and once again I would like to thank all of our colleagues across the Group for their hard work and resilience in achieving this result.

‘Trading across H2 to date has started strongly, again emphasising the increased scale of the business and demonstrating the success of our approach to mitigating the impact of inflationary pressures on our profit expectations.’

The retailer’s revenue was down 2 per cent to £561.1million, against £572.6million in the comparable period a year ago. Revenue jumped 15 per cent compared to the group’s pre-pandemic comparable.

DFS top brass declared an interim dividend of 3.7p per share, due to be paid on 25 May to shareholders. A ‘special return’  to shareholders is also being undertaken.

DFS said: ‘This special return will be implemented by way of a 10.0 pence special dividend to be paid alongside and in addition to the interim dividend of 3.7 pence and also through the repurchase for cancellation of up to £25million of the Group’s shares. The buyback will commence immediately and be implemented by way of an irrevocable instruction, subject to limits on the price paid based upon regulatory rules and minimum expected rates of return.’

Looking ahead, Mr Stacey, said: ‘Our expectations for total profits across FY22 and FY23 remain unchanged, with our confidence supported by our significant order bank and strong trading in H2. 

‘We narrow our scenario range for FY22 to recognise that manufacturing and logistics disruption may affect H2 throughput, however our resilient order bank should mean any such in-year disruption will cause profits to shift into the next FY23 reporting period.’

He added: ‘Whilst the macro-economic environment remains uncertain, we believe that our scale, brand strength and integrated retail strategy will continue to drive market share gains ahead of the competition.’      

DFS shares fell in early morning trading and were down 2.33 per cent or 4.60p to 193.00p. A year ago the share price was 245.00p, having dropped over 20 per cent in the past year. 

This post first appeared on Dailymail.co.uk