Dfs Furniture Plc · LSE:DFS
Dfs Furniture — H1 FY24 Earnings Presentation
25 slides from Dfs Furniture's earnings presentation, Mar 19, 2024
Slide 1: DFS Group Interim Results
DFS GROUP INTERIM RESULTS 19 March 2024 1
Slide 2: Overview
INTERIM 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
FY24 INTERIM RESULTS Introduction Gaining share in a volatile and weaker than expected market Continuing to extend our market leadership position +0.5%pts share gain to Outperforming the market in tough trading conditions record high of c38.5% Gross margin rate Operationally in the best shape ever +
Slide 4: Headlines
FY24 INTERIM RESULTS Headlines -1.1% -5.6% + 220 bps -£39.4m YoY order intake YoY Gross sales1 YoY gross margin rate £22m £8.7m +62% +£1.6m Gross operating cost Adjusted PBTu1 DFS YoY Established reduction YoY growth Customer NPS 1 Underlying PBT from continuing operations excluding brand amortisati
Slide 5: Market context
FY24 INTERIM RESULTS Market context Well positioned for when the market recovers ● FY23 volumes exited (15%) vs pre Sep-2023 pandemic levels FY23 vs FY24 H1 Guidance FY19 YoY ● Initial FY24 guidance assumed market YoY contraction of -5% YoY Market Value (1%)1 (9%)4 ● Actual market volumes weaker in
Slide 6: Market drivers
FY24 INTERIM RESULTS Market drivers Strengthening indicators, potential for market to start to recover from record low Consumer confidence / UK upholstery market size Consumer confidence - major purchases Consumer confidence: ● 80% of transactions are replacements ● Strong correlation between consumer
Slide 7: Market share distribution
FY24 INTERIM RESULTS Market share distribution We remain well positioned to capitalise on future market recovery ● Record Group market share ● DFS Group and general home retailers growing Other: Independents and general retailers ● Independents decline continuing DFS Group 26% 38.5% ● Over 3 x size
Slide 8: Overview
FY24 INTERIM RESULTS Overview Introduction Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Questions & Answers Tim Stacey & John Fallon 8
Slide 9: Results overview
FY24 INTERIM RESULTS Results overview (£m) unless stated H1 FY24 H1 FY23 YoY Revenue1 505.1 544.5 -7.2% Underlying PBT(A)1 8.7 7.1 1.6 Reported PBT 0.9 6.8 -5.9 Underlying basic EPS1 2.8p 2.2p 0.6p Net bank debt 133.9 135.6 -1.7 Leverage 1.6x 1.7x -0.1x ● Revenue down as expected due to prior year b
Slide 10: Revenue
FY24 INTERIM RESULTS Revenue Tough market & prior year order bank benefit drive decline (£m) unless stated H1 FY24 YoY DFS upholstery 525.6 -5.7% Sofology upholstery 140.6 -5.3% Gross Sales 666.2 -5.6% Revenue 505.1 -7.2% ● H1 order intake down -1.1%; market share gains partially offsetting the weaker
Slide 11: Cost to Operate Efficiencies
FY24 INTERIM RESULTS Cost to Operate Efficiencies Targeting savings to mitigate future inflation and underpin existing 8% PBT target c£50m annualised savings by FY26 Product: Property: Operating Costs: £20m - £25m £6m - £8m £20m - £25m On track ● H1 Gross margin rate improved for ● Retail lease regears
Slide 12: Gross margin
FY24 INTERIM RESULTS Gross margin Margin rate +220bps, on track towards 58% target (0.7%) +1.6% - (2.4%) +3.8% 56.0% 53.8% 54.4 % ● Freight rates returned to pre-pandemic levels, which offset the impacts of higher interest free credit costs and FX hedged rates ● Underlying product margins +c160bps, p
Slide 13: Operating costs (inc dep & interest)
FY24 INTERIM RESULTS Operating costs (inc dep & interest) Strong cost management and operating efficiencies more than offsets inflation ● Operating cost inflation contained to c3%, £7m ● Interest costs higher as a result of higher BoE rates (£2.7m) and higher avg net debt (£0.9m) ● Marketing spend optimi
Slide 14: Cash and Net debt
FY24 INTERIM RESULTS Cash and Net debt £250m refinancing completed Sept 2023, leverage stable ● Net debt of £133.9m, broadly unchanged after adjusting for interim dividend of £6.9m paid in early H2 FY24 ● Significant cash headroom secure for the next 3-4 years (Facility £250m: RCF £200m Sept 2027 + 14
Slide 15: Overview
FY24 INTERIM RESULTS Overview MARKET Introduction Tim Stacey CUSTOMER GROUP STRATEGY Financials John Fallon HOME Sofology DFS Sofology Home Strategy & Operational update Tim Stacey Sourcing & Manufacturing Platform Technology & Data Platform Outlook & Summary Tim Stacey Logistics Platform People & C
Slide 16: Our Pillars
FY24 INTERIM RESULTS Our Pillars DFS gaining share, Sofology holding profit, Home foundations in place ● New product & brand development ● Softer order intake performance offset ● Focus on £3bn beds/mattress sector driving conversion and AOV through cost management ● Stock management and drop ● Ted Ba
Slide 17: Platform Highlights
FY24 INTERIM RESULTS Platform Highlights Good progress in all areas MARKET Sourcing & Manufacturing OUR MISSION CUSTOMER Evolving & optimising global supplier mix GROUP STRATEGY Technology & Data HOME Intelligent Lending Platform roll-out across Sofology Utilising data to drive insight & decision ma
Slide 18: The Sofa Delivery Company
FY24 INTERIM RESULTS The Sofa Delivery Company Operations in great shape driving down costs ● Formed in May 2021 bringing DFS and Sofology logistics operations together ● UK wide distribution network of CDCs and delivery vehicles ● Smart well invested technology and integrated systems ● Powerful das
Slide 19: Overview
FY24 INTERIM RESULTS Overview Introduction Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Questions & Answers Tim Stacey & John Fallon 19
Slide 20: FY24 Guidance
FY24 INTERIM RESULTS FY24 Guidance Today Sept 2023 ● Q3 market volumes have weakened; ← Market demand → c-16% YoY Jan/Feb vs c-10% H1 Revenue 1,060 - 1,080 1,000 - 1,015 ● Market volatile; hard to predict PBTu (excl Red Sea) 30-35 20 25 Cash capex 25-30 25 25 ● Demand expected to improve supported N
Slide 21: Longer term
FY24 INTERIM RESULTS Longer term Market recovery and operational leverage will drive significant profit growth ● Downturn in market volumes has Impact of growing significantly impacted profit performance upholstery FY24* Change Illustrative ● Market recovery back to FY19 volumes demand: is expected Mark
Slide 22: Conclusions
FY24 INTERIM RESULTS Conclusions ● Very tough upholstery market with market demand at record lows ● Making good progress on what we can control: ○ Continuing to gain market share ○ Cost to Operate programme; gross margin rate continues to improve, operating costs reducing ○ Home foundations in place
Slide 23: Overview
FY24 INTERIM RESULTS Overview Introduction Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Questions & Answers Tim Stacey & John Fallon 23
Slide 24: Appendix
APPENDIX 24 24
Slide 25: Group Showroom Profile
FY24 INTERIM RESULTS Group Showroom Profile AS AT 24 DECEMBER 2023 (VS. 25 DECEMBER 2022) UK ROI TOTAL Large Format (c. 15,000sq.ft.+) 91 (+1) 3 94 (+1) Medium Format (c. 10,000sq.ft.) 17 (-1) 2 19 (-1) Small Format (c. 5,000sq.ft.) 2 (-1) - 2 (-1) Dwell standalone 1 - 1 DFS TOTAL 111 (-1) 5 116 (-1)