Sofa, so good: DFS has strong start to financial year but warns ‘significant uncertainty’ lies ahead

Furniture retailer DFS has reported better-than-expected trading as consumers spend more on their homes – but cautioned “significant uncertainty” lies ahead.

The group said it enjoyed strong order growth worth about £70m in extra revenues over the last six weeks compared with the same period last year, adding to a £100m boost earlier in the summer.

DFS has pencilled in a loss of up to £58m for the year to the end of June after coronavirus restrictions forced it to suspend deliveries, with revenues down by £271m over that period.

But it has since resumed full operations and said trading in recent weeks was “significantly ahead” of expectations. Shares opened 15% higher on the update.

DFS said the upturn partly reflected consumers “currently spending more on their homes relative to other sectors” as well as the release of “latent demand” built up during the lockdown.

It also pointed to its own efforts in shaping a “hybrid” online and bricks-and-mortar retail presence “which is particularly relevant in this consumer environment”.

But it also cautioned that the boost to trading could prove temporary.

“The financial year has started strongly, however we do note that significant uncertainty related to COVID-19 on UK consumer confidence and the potential impact of Brexit exists and it is exceptionally difficult to assess the outlook beyond the short term,” DFS said.

“While positive trading momentum currently remains we do note that some consumers may be bringing forward spending decisions and this may impact trading later in the financial year.”

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