Dfs Furniture Plc · LSE:DFS
Dfs Furniture — H1 FY2023 Earnings Presentation
28 slides from Dfs Furniture's earnings presentation, March 2023
Slide 1: Interim Results
DFS GROUP Interim Results MARCH 2023 1
Slide 2: Overview
FY23 INTERIM RESULTS PRESENTATION Overview Introduction & Overview Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Q&A Tim Stacey & John Fallon 22
Slide 3: H1 FY23 Summary
FY23 INTERIM RESULTS PRESENTATION H1 FY23 Summary Record market share, but challenging environment Strong second quarter order intake continued into second-half Winter Sale Increasing profit margins, cost headwinds reducing Margin ‘Build Back’ plan on track, margin improvement in H2 Profit guidance in
Slide 4: Market Context
FY23 INTERIM RESULTS PRESENTATION Market Context DFS Sofology Record market share… …with further headroom Our winning model Despite a challenging consumer DFS Group clear market leader: Our continued belief that the winning environment, consistent market share a fragmented long-tail of independents
Slide 5: Three areas of focus
FY23 INTERIM RESULTS PRESENTATION Three areas of focus 1. Growth 2. Gross Margin % 3. Costs & inflation Maintain & grow share FY15-19 FY22 FY24 exit + avg. rate £500m Drive Average Order Value operating costs + c.58% c.53% c.58% + Access Home, especially c.5% inflation Beds & Mattresses Market challen
Slide 6: Overview
FY23 INTERIM RESULTS PRESENTATION Overview Introduction & Overview Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Q&A Tim Stacey & John Fallon 6
Slide 7: Reflections so far
FY23 INTERIM RESULTS PRESENTATION Reflections so far 1. Exclusive brands, high quality products, Sofology offers upside 2. Powerful omni-channel platform with a track record of innovation 3. Unmatchable scale: unlocks market leading value, further leverage to come 4. A well invested, strongly position
Slide 8: Results overview
FY23 INTERIM RESULTS PRESENTATION Results overview H1 2023 H1 2022 (£m) unless stated 26 weeks to 26 weeks to 25-Dec-221 26-Dec-211 ● Revenue growth relative to pre-pandemic period Revenue 544.5 556.5 ● PBT down due to elevated H1 order bank, Growth vs FY19 +9.4% +11.8% inflationary pressures and gro
Slide 9: Revenue performance
FY23 INTERIM RESULTS PRESENTATION Revenue performance H1 v.H1 ● Gross Sales (deliveries) +9.6% higher than YoY FY19 FY23 FY19* ● Digital sales^ 24% of total gross sales, c40% Gross Sales 705.6 (1.1%) +9.6% higher than pre-pandemic DFS (inc Dwell) 557.2 (1.9%) +10.5% ● Higher average order values offs
Slide 10: Strong Q2 order growth
FY23 INTERIM RESULTS PRESENTATION Strong Q2 order growth Order value growth (vs FY19) ● Q2 Order Intake +16.3% vs FY19; order bank elevated by c£4m profit 16.3% ● Positive Winter Sale supports Q3 to date ● Market demand remains uncertain; consumer environment expected to remain challenging across CY2
Slide 11: Gross margin
FY23 INTERIM RESULTS PRESENTATION Gross margin ● Gross margin of 53.8%, up +30bps year on year; +190ps from H2 FY22 low of 51.9% ● Input costs: Freight rates headwind peaked CY 2022, fully reverses from March 2023 ● IFC subsidy costs contained to c£6m year on year; supported by favourable contract r
Slide 12: Gross margin Recovery plan on track
FY23 INTERIM RESULTS PRESENTATION Gross margin Recovery plan on track 1 2 3 4 ● Gross Margin on track to continue recovery in second half (to c56%) ● Freight rates <$2k from Mar ‘23 ● IFC offer now limited to 36 months Supply chain Freight rates normalising; ● Further Group sourcing Own manufacturing
Slide 13: Operating costs (including D&A and interest)
FY23 INTERIM RESULTS PRESENTATION Operating costs (including D&A and interest) ● Inflation mainly driven by labour and supply chain related costs ● Continued to invest in Beds awareness, new Sofology showrooms & warehouse capacity for growth ● Efficiencies from Sofa Delivery Company and reduced disrupt
Slide 14: Cash and Net Debt
FY23 INTERIM RESULTS PRESENTATION Cash and Net Debt Drivers of net debt movement: Profit weighted to H2 + Working capital normalising + Shareholder returns in respect of strong performance in prior years ● Leverage at 1.7x ● Target 0.5x - 1.0x ● Expect leverage to reduce as profit growth delivered 14
Slide 15: Capital distribution policy simplified
FY23 INTERIM RESULTS PRESENTATION Capital distribution policy simplified ● Ordinary dividend calculation simplified to EPS cover basis. Greater transparency, easier to forecast ● Net debt leverage target unchanged; prioritises long-term resilience ● Delivers attractive returns as profits grow from curr
Slide 16: Outlook
FY23 INTERIM RESULTS PRESENTATION Outlook FY23 Medium term ● Consumer outlook: market demand remains uncertain and hard to forecast ● Record market share: Group well positioned for when market volumes recover ● Q3 to date: Order intake in line with expectations ● Gross margin plan to rebuild to 58%
Slide 17: Overview
FY23 INTERIM RESULTS PRESENTATION Overview MARKET Introduction & Overview CUSTOMER Tim Stacey GROUP STRATEGY Financials John Fallon Sofology Strategy & Operational update DFS Sofology Home Tim Stacey Sourcing & Manufacturing Platform Outlook & Summary Tim Stacey Technology & Data Platform Logistics
Slide 18: The What: DFS Pillar
FY23 INTERIM RESULTS PRESENTATION The What: DFS Pillar DFS Sofology Strong on-going performance New Strategic Ongoing Workforce brand range investment Optimisation marketing development in format Solution Driving impact: DFS is one E.g extended Grand Designs Transformation roll out across Roll-out a
Slide 19: The What: Sofology Pillar
FY23 INTERIM RESULTS PRESENTATION The What: Sofology Pillar DFS Sofology Continued development Highly targeted New sustainable Extending our Leveraging brand eco range exclusive group proposition partnerships platforms New campaign delivering New Gaia: recyclable fabric Working with leading A fully
Slide 20: The What: Home Pillar
FY23 INTERIM RESULTS PRESENTATION The What: Home Pillar DFS Sofology Sustained investment in building the foundations Unlocking Driving Completed Beds & Online awareness & Drop ship Mattresses performance conversion Consolidation opportunity Focusing on £3bn 38% awareness of Beds/mattresses online A
Slide 21: Platform Highlights
FY23 INTERIM RESULTS PRESENTATION Platform Highlights On-going progress across the business, including: MARKET Sourcing & Manufacturing Investing in our Doncaster manufacturing site; OUR MISSION CUSTOMER evolve & optimise supplier mix; GROUP STRATEGY Technology & Data HOME Continued investment in on
Slide 22: Technology & Data
FY23 INTERIM RESULTS PRESENTATION Technology & Data On-going progress across the business, including: New data-rich customer segmentation For our Pillar Brands to help drive efficiency & effectiveness Integrated Retail Sofology’s Intelligent Lending Platform Intelligence Solutions Roll out of DFS’ succ
Slide 23: ESG Highlights
FY23 INTERIM RESULTS PRESENTATION ESG Highlights On-going progress made across the ‘Sofa Cycle’ framework and ‘Everyone Welcome’ People strategy including: E: Clear focus on product circularity Launched new ranges with innovative product construction, leading towards the market’s first fully circular
Slide 24: Overview
FY23 INTERIM RESULTS PRESENTATION Overview Introduction & Overview Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Q&A Tim Stacey & John Fallon 24
Slide 25: Summary & longer term view
FY23 INTERIM RESULTS PRESENTATION Summary & longer term view Today… Looking ahead: Growing Growing Growing Record market share, Revenues Margins Free Cash challenging market 75%+ Post-Tax 8%+ Free Cash £1.4bn Conversion £1.15bn Medium-Term Improving profit margins, 5% PBT(A) Margin cost headwinds red
Slide 26: Overview
FY23 INTERIM RESULTS PRESENTATION Overview Introduction & Overview Tim Stacey Financials John Fallon Strategy & Operational update Tim Stacey Outlook & Summary Tim Stacey Q&A Tim Stacey & John Fallon 26
Slide 27: Thank you
Thank you 27
Slide 28: Group Showroom Profile
FY23 INTERIM RESULTS PRESENTATION Group Showroom Profile AS AT 25 DECEMBER 2022 (VS. 26 DECEMBER 2021 EXCLUDING SOFA WORKSHOP) UK ROI Holland Spain TOTAL Large Format (c. 15,000 sq.ft.+) 90 (-2) 3 - (-2) - (-1) 93 (-5) Medium Format (c. 10,000 sq.ft.) 19 2 - (-4) - 21 (-4) Small Format (c. 5,000 sq.f