Furniture retailer DFS struggles with supply chain disruption as it swings to a profit

Sofa seller DFS grew revenue by 47% in the 12 months to the end of June, despite disruption caused by the ship that blocked the Suez Canal and shortages of raw materials.

Thursday, 23rd September 2021, 8:07 am
DFS said it has started the new financial year with “strong trading momentum” as it has a large bank of orders, but is facing demanding conditions.

The furniture giant said revenue had risen from £725 million in the last financial year to £1.1 billion in the most recent period.

It is even higher than the figure recorded two years ago, when DFS revenue hit £996 million.

Despite the period running from July 2020 to June 2021 – taking into account much of the pandemic – it was the last three months that were the worst for this disruption.

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“Our revenue growth in (the 2021 financial year) was however constrained by sector-wide pressures on supply chains from raw materials availability, container shipping delays (including the effects of disruption in the Suez Canal) and Covid-19 disruption of factory production, particularly in the final quarter of the year,” DFS said.

Even with vaccine rollouts, DFS is still having to work in a different way to how it would have operated before the pandemic.

The company’s customers are considerably less happy. Satisfaction dropped from 43% in the 2020 financial year to just 31% this time round.

“This June figure captures those customers most impacted by delivery delays caused by disruption to shipping as a result of Covid-19 and raw material supply,” said chief executive Tim Stacey.

He added: “Performance throughout the year was particularly affected by shipping disruption from the Far East and raw materials supply issues relating primarily to foam availability in Europe.

“We have also faced internal and external manufacturing capacity and delivery constraints and cost inflation due to high levels of demand for our products.”

The company added that it has started the new financial year with “strong trading momentum” and a large bank of orders.

“Whilst the high levels of demand are welcome, they do present substantial operational challenges for our supply chain and manufacturing teams to overcome,” it said.

Pre-tax profit hit £99.2 million in the 12 months to June, from a loss of £81.2 million a year earlier, and 55.6% higher than the same point in 2019.