DFS Furniture PLC reviews cash allocation policy after strong finish

DFS Furniture PLC (LSE:DFS) said it will soon inform investors about how it plans to use its cash after first-half orders were “strong” but not at the “exceptional” level from the year before.

Gross sales for the half-year to 26 December were down 2% on the prior year but rose 10% compared with 2019 before the pandemic had begun.

The UK’s leading retailer of living room and upholstered furniture said it was hit by Covid-related absences, supplier manufacturing capacity, and logistics performance, along with the wider retail industry.

Current order intake performance was said to remain strong, with the important post-Christmas trading period starting well.

“While the market remains hard to predict, we believe our scale, brand strength, and integrated retail strategy will allow us to drive market share gains ahead of the competition,” said chief executive Tim Stacey.

Full-year 2022 expectations remain unchanged for profit before tax of £66-to-96mln.

“Looking ahead we will continue to invest in our digital platforms and our showrooms, our delivery network, our UK manufacturing capacity, and with expansion into other home categories, we are well-positioned to succeed,” added Stacey.

With a half-year net bank debt position in the region of £65-70mln, including circa £28mln of cash utilised for dividend payments and employee scheme related share repurchases, DFS said based on its good underlying cash generation and positive trading outlook, “we are reviewing the current implementation of our capital allocation policy”.

“It is clear that we currently have significant capital available to deploy, and we will share our future investment and special capital return plans, together with our decision-making parameters, at our upcoming investor event on 15 March 2022.”