Dfs Furniture Plc · LSE:DFS
Dfs Furniture — FY2021 Earnings Presentation
34 slides from Dfs Furniture's earnings presentation, Sep 23, 2021
Slide 1: DFS Furniture Plc Results Presentation
DFS FURNITURE PLC Results Presentation 23rd September 2021
Slide 2: Agenda
AGENDA Welcome & Introduction Tim Stacey Financials Mike Schmidt Strategy update Tim Stacey Tim Stacey and Q&A Mike Schmidt 2
Slide 3: FY21 Summary: Delivering Sustainable Growth
FY21 SUMMARY: DELIVERING SUSTAINABLE GROWTH — Strong year delivering record revenues, profit and cash flow — Driven by our dominance in digital channels (+184% Y-o-Y) — Combined together, our integrated retail platform has enabled us to increase market share by 2%+ — Successfully accelerating our pu
Slide 4: Today... Strong Momentum Continues With Our Operating Model
TODAY... STRONG MOMENTUM CONTINUES WITH OUR OPERATING MODEL DELIVERING SUSTAINABLE GROWTH STRONG DEMAND SIDE SOME SUPPLY SIDE LEVERAGING OUR GROWTH CHALLENGES STRUCTURAL ADVANTAGES — Homeware market remains — Raw material costs inflation — Cost inflation being offset buoyant — Global shipping — Addi
Slide 5: Unlocking a 'Flywheel' for Growth
UNLOCKING A ‘FLYWHEEL’ FOR GROWTH 1. DELIVERING CLEAR SUSTAINABLE MARKET LEADER GROWTH 2. — Growing market share driving further 4. scale benefits INTEGRATED HOME RETAIL — Strong cash flows enabling continual MARKET BUSINESS investment to deliver our strategy TAILWIND ‘ENGINE’ — Progressing with Hom
Slide 6: Looking Ahead… Logical Evolution to Our New Pillars & Platforms Strategy
LOOKING AHEAD… LOGICAL EVOLUTION TO OUR NEW “PILLARS & PLATFORMS” STRATEGY FROM TO 2018-21: Deliver ‘3x3’ Strategy 2022-24: Unlocking New Growth GROUP STRATEGY Home Technology & Data Platform Logistics & Operating Platform Manufacturing & Sourcing Platform ESG 6
Slide 7: Financials
FINANCIALS 7
Slide 8: Strong Revenue Performance Drives Profit and Deleveraging
FINANCIAL OVERVIEW STRONG REVENUE PERFORMANCE DRIVES PROFIT AND DELEVERAGING FY21 FY19 FY20 — Strong revenue growth in year £m LTM to LTM to 30- LTM to 27-Jun-21 Jun-19 1 28-Jun-20 — Order intake well above revenues driving Revenue 1,067.7 996.2 724.5 record order bank Growth (ex SWS) vs FY19 2 9.7%
Slide 9: Healthy Retail Gross Margin in an Inflationary Environment
FINANCIAL OVERVIEW HEALTHY RETAIL GROSS MARGIN IN AN INFLATIONARY ENVIRONMENT 65% — DFS brand underlying channel retail margins stable: • Decreased own manufacturing within the mix 60% • Increased mix of web orders given lockdowns 55% — Sofology gross margin growth reflects range optimisation and sc
Slide 10: Operating Costs Scaling, With Investment for the Future
FINANCIAL OVERVIEW OPERATING COSTS SCALING, WITH INVESTMENT FOR THE FUTURE 9.6 27.6 524.4 £10m increase in direct operating costs • Investment in integrated retail model, offset by 2.8 13.8 marketing efficiency and platform benefits 495.4 • Logistics costs increased to scale make-to- order model cos
Slide 11: Significant Deleveraging Driven by Strong Profit and Working Capital Inflows
FINANCIAL OVERVIEW SIGNIFICANT DELEVERAGING DRIVEN BY STRONG PROFIT PERFORMANCE AND TRANSIENT WORKING CAPITAL INFLOWS FY21 Cash Flow — Working capital inflow driven by trading trends 60 +90.0 • £35.1m growth in payments on account, £50.5m increase in trade & other payables 0 (36.5) (12.7) +116.3 (18
Slide 12: Disciplined Capital Investment Approach
FINANCIAL OVERVIEW DISCIPLINED CAPITAL INVESTMENT APPROACH - BUT SIGNIFICANT OPPORTUNITIES EXIST LOGISTICS SHOWROOMS DIGITAL — Growth/maintenance of asset base to — Opening of at least 6 new group — Continued investment in sector support delivered revenue base showrooms leading web channels — Comple
Slide 13: Order Intake Momentum Continues
FINANCIAL OVERVIEW ORDER INTAKE MOMENTUM CONTINUES – FOCUS ON DELIVERED REVENUES TO DRIVE CUSTOMER SERVICE AND PROFIT GENERATION LOW MEDIUM HIGH ORDER INTAKE Order intake well-ahead of previous expectations and order bank 11% 15% 15%+ currently at record levels which provides resilience vs. FY19 COV
Slide 14: New Sustainable FY23 Base Drives Financial Returns
FINANCIAL OVERVIEW NEW SUSTAINABLE FY23 BASE DRIVES FINANCIAL RETURNS METRIC FY19 PERFORMANCE DRIVERS FY23 BASE ONGOING OUTLOOK • >10% LFL sales growth from market share, AOV and market size growth • Above upholstery market growth c.£969m REVENUES • 20 new showrooms £1.15bn+ • Grow share in £5bn liv
Slide 15: Strategy Update
STRATEGY UPDATE 15
Slide 16: £40m PBT Medium Term Benefit
STRATEGY IMPLEMENTATION UPDATE 1. OMNI-CHANNEL: 1. COST EFFECTIVENESS AND PROPERTY COST 1. SOFOLOGY: develop seamless customer journey REDUCTION: develop to a nationwide business across channels reduce our relative cost base 2. PRODUCT INNOVATION: 2. SUPPLY CHAIN: 2. DWELL: enhance our unique and be
Slide 17: On Track to Achieve £40m Incremental Profit Target
STRATEGY IMPLEMENTATION UPDATE ON TRACK TO ACHIEVE £40M INCREMENTAL PROFIT TARGET 1 1. OMNI-CHANNEL £10m 2. PRODUCT INNOVATION achieved to date 3. CUSTOMER PROPOSITION AND SERVICE INNOVATION 1. COST EFFECTIVENESS AND PROPERTY COST REDUCTION £5m 2. SUPPLY CHAIN £3m2 3. MARKETING TRANSFORMATION £8m 1.
Slide 18: Driving Core DFS Growth: Across All Channels
STRATEGY IMPLEMENTATION UPDATE DRIVING CORE DFS GROWTH: ACROSS ALL CHANNELS Product innovation focused on sustainability 2 Further 1 investment to support 1. OMNI-CHANNEL: customer journey develop seamless customer journey across website across channels and showrooms 2. PRODUCT INNOVATION: enhance o
Slide 19: Driving Core DFS Growth: Leading in Digital
STRATEGY IMPLEMENTATION UPDATE DRIVING CORE DFS GROWTH: LEADING IN DIGITAL The power of an integrated retail business: Physical + Digital = winning combination 1. OMNI-CHANNEL: No1 for Growth2 develop seamless customer journey No1 for Search1 No1 for Market DFS online sales (FY21 % Y-o-Y Search Grow
Slide 20: Building Platforms to Enable Group-Wide Growth
STRATEGY IMPLEMENTATION UPDATE BUILDING PLATFORMS TO ENABLE GROUP-WIDE GROWTH SoDelCo offering Group-wide delivery 7 days/week; £3m+ annual savings by end FY22 2 Property savings on track, expect further savings as leases expire beyond FY23 1. COST EFFECTIVENESS AND PROPERTY 1 £6-8m £5.6m to date CO
Slide 21: Unlock and Deliver New Profitable Growth (I)
STRATEGY IMPLEMENTATION UPDATE UNLOCK AND DELIVER NEW PROFITABLE GROWTH (I) 5 new showrooms opened in FY21 + 8 planned in current year Differentiated marketing focused on aspirational appeal 1. SOFOLOGY: develop to a nationwide business 2. DWELL: New differentiated ranges broaden reach through digit
Slide 22: Unlock and Deliver New Profitable Growth (II): Home
STRATEGY IMPLEMENTATION UPDATE UNLOCK AND DELIVER NEW PROFITABLE GROWTH (II) HOME • Targeting £5bn living room accessories and bedroom TAM • Current ‘Home’ business: £100m pa = major growth opportunity 1. SOFOLOGY: • Building a powerful range of leading /exclusive brands develop to a nationwide busi
Slide 23: Structural Advantages of Integrated Business Model
MARKET UPDATE STRUCTURAL ADVANTAGES OF INTEGRATED BUSINESS MODEL MARKET FACTORS: STRUCTURAL ADVANTAGES: ACTIONS TAKEN: Input cost pressures Scale: Increased manufacturing capacity: • Raw materials pricing and availability • Scale advantages providing relative cost benefit • Increasing existing suppl
Slide 24: ESG: Significant, Ongoing Progress Across All Key Areas
STRATEGY IMPLEMENTATION UPDATE ESG: SIGNIFICANT, ONGOING PROGRESS ACROSS ALL KEY AREAS ENVIRONMENT SOCIAL & GOVERNANCE NEW COMMITMENTS • Signed up to BRC climate action roadmap to reach net zero • SBTi approved Science Based Targets Inclusion and diversity by July-2022 • Strategy launched, initiativ
Slide 25: In Summary
STRATEGY IMPLEMENTATION UPDATE IN SUMMARY: Delivering sustainable growth FY22+: new ‘Pillars & Platform’ Strategy — Strong year delivering record revenues, profit and cash flow — Market share increased by 2%+ — On track to achieve £40m incremental PBT target — Successfully accelerating our push into
Slide 26: Q&A
Q&A 26
Slide 27: Appendices
APPENDICES
Slide 28: Segment Shares - Sofas
Proprietary market share SEGMENT SHARES - SOFAS data from Barclaycard +2%pt share gain 4.50 40% 4.00 3.5 3.6 3.7 3.8 3.9 3.7 34% 35% 3.4 3.4 3.50 3.2 3.3 3.2 3.2 3.2 3.2 30% 3.0 3.0 2.9 2.9 2.9 3.00 2.8 2.9 2.8 25% 2.50 2.4 2.2 20% 2.0 2.0 2.00 1.7 15% 1.50 10% 1.00 0.50 5% 0.00 0% UK Upholstery Seg
Slide 29: Brand Performance
BRAND PERFORMANCE SELLING AND REVENUES (£M) GROSS MARGIN DISTRIBUTION COSTS (£M) • Strong showroom and web order intake • Mix effect from high margin internal manufacturing • increase in the effectiveness of our marketing spend • Revenue growth lower than order intake due to already operating at cap
Slide 30: Performance for the 52 Weeks FY21 & FY20
PERFORMANCE FOR THE 52 WEEKS FY21 & FY20 Total before non - 52 weeks ended 27 June 2021 DFS Sofology Subtotal Sofa Workshop Non underlying Total underlying charges Gross Sales 1,093.2 269.2 1,362.4 6.3 1,368.7 - 1,368.7 Revenue 848.0 214.6 1,062.6 5.1 1,067.7 - 1,067.7 Cost of Sales (363.4) (101.8)
Slide 31: Performance for the Pro Forma 52 Week Period – FY19
PERFORMANCE FOR THE PRO FORMA 52 WEEK PERIOD – FY19 Total before non - 52 weeks ended 30 June 2019 - IAS 17 DFS Sofology Subtotal Sofa Workshop Non underlying Total underlying charges Gross Sales 992.1 260.7 1,252.8 34.4 1,287.2 - 1,287.2 Revenue 762.6 205.9 968.5 27.7 996.2 - 996.2 Cost of Sales (3
Slide 32: Group Showroom Profile
GROUP SHOWROOM PROFILE AS AT 27 JUNE 2021 (VS. 28 JUNE 2020 EXCLUDING SOFA WORKSHOP) UK ROI Netherlands Spain TOTAL Large Format (c. 15,000sq.ft.+) 91 3 2 1 97 Medium Format (c. 10,000sq.ft.) 18 (+1) 2 4 (+1) - 24 (+2) Small Format (c. 5,000sq.ft.) 4 - - (-1) 1 5 (-1) Dwell standalone 2 (-1) - - - 2
Slide 33: ESG - Progress and Targets
ESG - PROGRESS AND TARGETS SECTION KPI TARGET Wood sourcing All our sofas will be built of 100% FSC Certified Wood by 2025 Dec - 2025 Leather sourcing The leather we use will not lead to deforestation in Amazon regions or elsewhere by December 2021 Dec - 2021 Packaging Ensure 100% of the plastic pac
Slide 34: Disclaimer
DISCLAIMER This presentation contains statements that constitute forward-looking statements relating to the business, financial performance and results of the Company and the industry in which the Company operates. These statements may be identified by words such as “may”, “will”, “shall”, “anticipa