Dfs Furniture Plc · LSE:DFS
Dfs Furniture — FY2023 Earnings Presentation
27 slides from Dfs Furniture's earnings presentation, Sep 21, 2023
Slide 1: FY23 Results
DFS GROUP FY23 RESULTS 21 September 2023 1
Slide 2: Overview
FY23 RESULTS Overview Introduction Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Questions & Answers Tim Stacey & John Fallon 2
Slide 3: Introduction
FY23 RESULTS Introduction Continuing to extend our leadership position +2%pts share gain to Market share gains in tough trading conditions record high of 38% c£50m of annualised Operational excellence & cost efficiencies programme efficiency savings by Three areas of cost focus: product, property &
Slide 4: FY23 Headlines
FY23 RESULTS FY23 Headlines +15% +2%pts +1.7%pts to record 38% Gross sales vs FY19 YoY market share Gross margin rate YoY pre-pandemic1 growth growth1 £30.6m £250m +59% lending facility Refinancing complete, DFS NPS established PBTA2 covenants unchanged customer YoY 1 Continuing operations 2 Underly
Slide 5: Broader market context
FY23 RESULTS Broader market context: Market volumes down c15% relative to pre-pandemic FY23 vs ● Market volumes 15% below FY19, driven FY23e YoY FY19 by consumer confidence, cost of living crisis Market Value1 £3.18bn (6%) (1%) ● Market value declines supported by RPI to offset input cost inflation
Slide 6: Overview
FY23 RESULTS Overview Introduction Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Questions & Answers Tim Stacey & John Fallon 6
Slide 7: Results overview
FY23 RESULTS Results overview (£m) unless stated FY231 FY221 Revenue 1,088.9 1,149.8 Market Share 38% 36% Reported PBT 29.7 58.5 Underlying PBTA 30.6 60.3 Underlying basic EPS 9.6p 17.5p Net bank debt 140.3 90.0 Leverage 1.9x 1.0x Ordinary DPS 4.5p 7.4p ● Revenue down in challenging market, but gain
Slide 8: Revenue performance
FY23 RESULTS Revenue performance Sales reflect tough market partly mitigated by share gains (£m) unless stated FY23 YoY Gross Sales 1,423.6 -3.5% DFS (inc Dwell) 1,125.5 -3.7% Sofology 298.1 -2.2% Digital % Sales^ 24.0% +0.7%pts Revenue 1,088.9 -5.3% Market Share 38% +2%pts ● Gross Sales declined ac
Slide 9: Gross margin
FY23 RESULTS Gross margin Margin improving in line with expectations ● Gross margin rate continuing to improve; H1 53.8%, H2 55.0% ● Supply chains back to normal; COVID disruption reversed; FY23 exit freight rates back to pre-pandemic levels ● Retail price increases from May mitigates FX headwind in
Slide 10: Gross margin outlook
FY23 RESULTS Gross margin outlook Recovery on track to 58% target +1.5% +1.5% (1.6%) 58.0% 2.2% +2.2% 56.5% 54.4% FY23 Freight FY23 RPI FX FY24 entry Product Target margin rate strategy margin ● 56.5% FY24 entry rate: ○ Freight rates now back to pre-pandemic rates ○ Full year effect of FY23 retail p
Slide 11: Operating costs
FY23 RESULTS Operating costs Efficiencies and reversal of disruption more than offset by significant cost inflation ● COVID disruption impacts mostly reversed across absence levels, trunking and customer service costs ● Efficiency savings primarily from optimising of Sofa Delivery Co. and Marketing
Slide 12: Cost to Operate Efficiencies
FY23 RESULTS Cost to Operate Efficiencies Savings will mitigate future inflation, supports progress towards 8% PBTA target c£50m annualised savings by FY26 Product: Property: Operating Costs: £20m - £25m £6m - £8m £20m - £25m ● Sustainable strategic supplier ● Future lease re-gear opportunities ● Si
Slide 13: Cash and Net debt
FY23 RESULTS Cash and Net debt Working capital normalised, leverage expected to reduce £29m free cash flow before working capital normalisation ● Net Debt movement driven by working capital normalising and special shareholder returns in respect of cash generated in prior periods ● Capital investment
Slide 14: £250m Credit Facilities signed Sep '23
FY23 RESULTS £250m Credit Facilities signed Sep ‘23 Renewed facility increased and extended ● Available funds now increased to £250m from £215m £50m ● £200m bank facility matures Sep 2027, +16mth extension option To Dec-24 £215m ● £50m US PP notes mature evenly between To Dec-25 £193.5m Sep 2028 and
Slide 15: 4 year view post pandemic
FY23 RESULTS 4 year view post pandemic Share growth and orderbank unwind not enough to offset weak market, high inflation Gross sales FY23 vs FY19: ● Sales increase from share gains in declining market (market: c-1% in value; c-15% 1,240 1,424 volume decline) and order bank unwind ● Share gains from
Slide 16: Overview
FY23 RESULTS Overview MARKET Introduction Tim Stacey CUSTOMER GROUP Financials STRATEGY John Fallon HOME Sofology DFS Sofology Home Strategy & Operational update Tim Stacey Sourcing & Manufacturing Platform Outlook & Summary Technology & Data Platform Tim Stacey Logistics Platform People & Culture P
Slide 17: Market Drivers
FY23 RESULTS Market Drivers Challenging short term outlook, Group well positioned to continue to grow share Market drivers: ● Consumer confidence remains challenging, but signs of recovery ● Housing market represents c20% of our sales, housing transactions -9% FY23 vs FY22 ● Availability of consumer
Slide 18: Market share gains: today & looking ahead
FY23 RESULTS Market share gains: today & looking ahead Significant runway for further share gains Other: ● Despite market & consumer General retailers headwinds, the Group continues to and independents perform well and has secured record DFS Group 26% market share 38% ● Given the long-tail of indepe
Slide 19: Our Pillars
FY23 RESULTS Our Pillars Extending our leadership position, strong progress across all areas ● New product & brand development ● New showroom rollout continues, ● Focus on £3bn beds and driving conversion and AOV +3 to 58, scope for 65-70 mattresses opportunity through ● New formats now in 58 ● New
Slide 20: Platform Highlights
FY23 RESULTS Platform Highlights Progress across all four key platforms MARKET Sourcing & Manufacturing OUR MISSION CUSTOMER Continuing to evolve & optimise global supplier partnerships; UK manufacturing optimised GROUP STRATEGY HOME Technology & Data Home Fulfilment foundations concluded; ILP roll-
Slide 21: Sustainability
FY23 RESULTS Sustainability New initiatives and innovation 2040 net zero pledge On track to submit science based targets to SBTI by June 2024 Launched first circular sofa range The Gaia, in partnership with George Clarke part of the Sustainable Edit at Sofology Longer-term ambition to become a circu
Slide 22: Overview
FY23 RESULTS Overview Introduction Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Questions & Answers Tim Stacey & John Fallon 22
Slide 23: FY24 Guidance
FY23 RESULTS FY24 Guidance Group Revenue Underlying PBTA Cash Capex £1,060-1,080m £30-35m £25-30m P&L: Cash flow: ● Revenue: assumes market order volumes down -5% ● Working capital flat over 52 weeks* ● GM%: continued improvement to 57% ● Capex ● Operating cost inflation: 4% ○ Cash: £25m-£30m ● Prof
Slide 24: Looking forward
FY23 RESULTS Looking forward: Focused on improving profitability; Targeting 8% PBTA as market recovers ● Route to 5% PBTA margin, independent of the expected recovery in market volumes PBTA ● As market volumes recover to pre- 8% % pandemic levels: ○ Operational leverage supports 5% 8% PBTA 3% ○ Nega
Slide 25: Overview
FY23 RESULTS Overview Introduction Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Questions & Answers Tim Stacey & John Fallon 25
Slide 26: Appendix
APPENDIX 26 26
Slide 27: Group Showroom Profile
FY23 RESULTS PRESENTATION Group Showroom Profile AS AT 25 JUNE 2023 (VS. 26 JUNE 2022 EXCLUDING SOFA WORKSHOP) UK ROI TOTAL Large Format (c. 15,000sq.ft.+) 90 (-1) 3 93 (-1) Medium Format (c. 10,000sq.ft.) 18 2 20 Small Format (c. 5,000sq.ft.) 3 - 3 Dwell standalone 1 - 1 DFS TOTAL 112 (-1) 5 117 (-