Dfs Furniture Plc · LSE:DFS
Dfs Furniture — FY2024 Earnings Presentation
29 slides from Dfs Furniture's earnings presentation, Sep 25, 2024
Slide 1: FY24 Results
DFS GROUP FY24 Results 25 September 2024
Slide 2: Overview
FY24 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 RESULTS Introduction Good operational progress in very challenging market conditions Controlling the controllables: Cost to operate ● Record NPS scores ● Clear market leadership, gross margin improvement, cost base lowered efficiency savings of ● Product and marketing innovation alongside new bra
Slide 4: Headlines
FY24 RESULTS Headlines -1.8% +140 bps £27.5m (55.8%) YoY gross margin rate Cost to operate YoY order intake1 (FY24 rate) efficiency savings Post-purchase & £10.5m £85.2m post-delivery NPS at (£30.6m) record highs Adjusted PBTu2 Liquidity headroom Net promoter scores (prior year) 1 Calculated by compar
Slide 5: Market context
FY24 RESULTS Market context Market volumes have been at record lows Sep-23 FY24 vs FY24 YoY guidance FY19 Market Volume (5%) (10%)12 (23%)1 ● Market volumes worse than anticipated ○ c10% down YoY ○ c23% down vs pre pandemic ● Reflecting weak market drivers ○ Housing transactions down -9% YoY LTM to J
Slide 6: Market size and share
FY24 RESULTS Market size and share We are the clear market leader Maintaining our …over 3x size Market developments market leadership of nearest competitor DFS Group clear market leader: Consumer confidence / UK upholstery a fragmented long-tail of independents & ● Market share1 36% vs 32% 2020 marke
Slide 7: Market drivers
FY24 RESULTS Market drivers Improving outlook signalling potential upholstery market recovery Consumer confidence - major purchases Property transactions Real household disposable income ● 80% of transactions are replacements ● Drive c20% of upholstery purchases ● Real disposable income inflexion poin
Slide 8: Overview
FY24 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 RESULTS Results overview (£m) unless stated FY241,3 FY232,3 YoY Revenue 987.1 1,088.9 (9.3%) Underlying PBT(A) 10.5 30.6 (20.1) Reported PBT (1.7) 29.7 (31.4) Underlying basic EPS 1.5p 9.6p (8.1p) Net bank debt 164.8 140.3 (24.5) Leverage4 2.5x 1.9x (0.6x) Ordinary DPS 1.1p 4.5p (3.4p) ● Revenu
Slide 10: Revenue
FY24 RESULTS Revenue Lower due to weak market demand & FY23 order bank benefit (£m) unless stated FY24 YoY DFS (inc Dwell) 1,047.0 (7.0%) Sofology 264.8 (11.2%) Gross Sales 1,311.8 (7.9%) Revenue 987.1 (9.3%) ● Order intake down -1.8% in the period1 in tough market conditions ● Gross sales and revenu
Slide 11: Cost to Operate efficiencies
FY24 RESULTS Cost to Operate efficiencies Delivering £50m savings target faster than expected Product cost of goods ● Volumes redistributed to optimise cost of goods with key £50m supplier partnerships FY26 Target New savings Operating costs opportunities ● Sofa Delivery Company productivity savings
Slide 12: Gross margin
FY24 RESULTS Gross margin Margin rate +140bps, with scope for further growth - 1.1% (1.5%) (0.7%) 2.5% 54.4 54.4% 55.8% % £5.5m delivered from cost to operate efficiencies ● Gross margin benefitted from lower freight rates, product cost of goods improvements and H2 FY23 RPI increases ● Looking forward,
Slide 13: Operating costs (inc dep & interest)
FY24 RESULTS Operating costs (inc dep & interest) £21.3m net savings supported by cost efficiencies and disciplined cost management ● Interest costs higher as a result of higher BoE rates and higher average net debt ● Inflation impact contained to c.3% / £12m, mainly wages, energy costs and business ra
Slide 14: Cash Flow
FY24 RESULTS Cash Flow Maintaining disciplined cash management FY24 FY23 ● Cash capex prioritised in the period, in response to more challenging market environment Underlying EBITDA / other* 143.2 164.0 ● Bank interest increased by £8.1m as a result of Capex (21.6) (34.9) higher BoE rates and higher
Slide 15: Net debt & covenants
FY24 RESULTS Net debt & covenants Focus on maintaining balance sheet flexibility £m £85.2m remaining liquidity £250m facility ● Closing net debt £164.8m, good headroom versus £250m facility secured in Sept 2023 ● Year end covenant tests fully satisfied, leverage1 2.5x (limit 3.0x), fixed charge cover 1
Slide 16: Overview
FY24 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 & Culture P
Slide 17: Our Pillars
FY24 RESULTS Our Pillars Clear market leadership position ● New product & exclusive brand ● Price and range proposition refreshed ● Foundational infrastructure in place development driving conversion ● Promotional activation introduced ● Margin and cost improvement drive and AOV year on year profit i
Slide 18: DFS: Broadening appeal
FY24 RESULTS DFS: Broadening appeal Long term growth from broadened DFS proposition ● Exclusive brands COVID-19 IMPACT ○ FY24 Ted Baker ○ FY25 La-Z-Boy ● Shift in marketing strategy Exclusive brands order intake ● Product development examples ○ Cinesound ○ House Beautiful refresh 2014 2024 18
Slide 19: Sofology: Proposition evolution
FY24 RESULTS Sofology: Proposition evolution Range improvements & pricing alterations in H2 with instantaneous improvement Actions Impact Retail pricing reduced Outperformed the 38% conversion lift Momentum has market* across Q4 online continued through into FY24 FYX25 YTD New product ranges Web red
Slide 20: NPS scores
FY24 RESULTS NPS scores Both brands in good shape and achieving record high scores Established ● Post-purchase Post-purchase scores at record Customers highs in both brands ● Established customer scores DFS recovering from pandemic disruption impacts ● Trend continues in Sofology FY25 to date 20
Slide 21: Platform Highlights
FY24 RESULTS Platform Highlights Good progress across all areas MARKET Sourcing & Manufacturing Redistribution of production following manufacturing site closures OUR MISSION CUSTOMER Optimisation of cost and quality across our supplier base GROUP STRATEGY Technology & Data Intelligent Lending Platf
Slide 22: The Sofa Delivery Company
FY24 RESULTS The Sofa Delivery Company Developing a valuable asset Record high post-delivery NPS scores and Smart well invested operational efficiencies reducing costs technology and Formed in 2021 to bring integrated systems Post-delivery Cost base YoY DFS and Sofology NPS inflation & volume adjusted
Slide 23: Overview
FY24 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: FY25 Outlook
FY24 RESULTS FY25 Outlook We expect to deliver profit and free cash flow growth ● FY25 trading to date has been in line with our expectations ● Expect to achieve market consensus profit expectations*: ○ Low single digit market demand recovery expected, strengthening over course of year ○ PBTu H2 weight
Slide 25: Longer term
FY24 RESULTS Longer term Market recovery and operational leverage will drive significant profit growth ● Downturn in market volumes has significantly impacted profit performance Market Impact of growing Illustrative FY24 recovery upholstery demand: future P&L ● Market recovery back to pre pandemic (illu
Slide 26: Overview
FY24 RESULTS Overview Introduction Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Questions & Answers Tim Stacey & John Fallon 26
Slide 27: APPENDIX
APPENDIX 27 27
Slide 28: Non-underlying costs
FY24 RESULTS Non-underlying costs ● Restructuring costs: Closure of one of our manufacturing plants and wood FY24 (£m) P&L Cash mills, restructuring of central support functions Restructuring costs 6.5 4.1 ● Land slippage: Remediation works required to an area of land slippage Land slippage costs 3.
Slide 29: Group Showroom Profile
FY24 RESULTS Group Showroom Profile AS AT 30 JUNE 2024 (VS. 25 JUNE 2023) UK ROI TOTAL Large Format (c. 15,000sq.ft.+) 90 3 93 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 110 (-2) 5 115 (-2) Large format (c. 15,000sq