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DFS profits down

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Yet more signs the economy has tanked ... are people running out of PPI cash? Or being turned down for credit? Scared their job won't last? Worried by IR rises?

Tide is going out ... many have been swimming naked.

Financial Summary:

·      Gross sales up 1.1% to £990.8 million (FY16: £980.4 million)

·      Revenue up 0.9% to £762.7 million (FY16: £756.0 million)

·      EBITDA down 12.7% to £82.4 million (FY16: £94.4 million)

·      Profit before tax down 22.3% to £50.1 million (FY16: £64.5 million)

·      Underlying EPS down 21.1% to 18.7p (FY16: 23.7p)

·      Higher leverage primarily due to lower profitability: 1.75x net debt / EBITDA (FY16: 1.45x)

Edited by Guest

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25 minutes ago, Grab_Some_Popcorn said:

Yet more signs the economy has tanked ... are people running out of PPI cash? Or being turned down for credit? Scared their job won't last? Worried by IR rises?

Tide is going out ... many have been swimming naked.

Financial Summary:

·      Gross sales up 1.1% to £990.8 million (FY16: £980.4 million)

·      Revenue up 0.9% to £762.7 million (FY16: £756.0 million)

·      EBITDA down 12.7% to £82.4 million (FY16: £94.4 million)

·      Profit before tax down 22.3% to £50.1 million (FY16: £64.5 million)

·      Underlying EPS down 21.1% to 18.7p (FY16: 23.7p)

·      Higher leverage primarily due to lower profitability: 1.75x net debt / EBITDA (FY16: 1.45x)

Stores are pretty bombed out already. The previous year after tax was 60 million against a Market cap of 450 million...a price to earnings of less than eight. But there are a lot like Debenhams that are a hell of a lot cheaper. But agree with your sentiment, the sector is too risky.

Meanwhile I also give the supposed safety of the multinationals a miss too. Imperials Brands at +50 p/e they can keep them.

Domestic stocks priced to fail. Internationals come at a premium.

Edited by crashmonitor

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I like DFS as a company.Great at generating free cash flow.However the management want their heads looking at paying out a big special dividend of 9.5p a share when they have leverage thats now gone over 1.5.Why is it management always say we prefer debt at 1.5 earnings etc.?.DFS could of been going into the downturn almost debt free,but instead have leverage.They nearly always produce big free cash,but if it gets really nasty whos to say they will.

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8 minutes ago, durhamborn said:

I like DFS as a company.Great at generating free cash flow.However the management want their heads looking at paying out a big special dividend of 9.5p a share when they have leverage thats now gone over 1.5.Why is it management always say we prefer debt at 1.5 earnings etc.?.DFS could of been going into the downturn almost debt free,but instead have leverage.They nearly always produce big free cash,but if it gets really nasty whos to say they will.

Yep operating margin is 10%, not much of a buffer if they are forced to discount deeper.

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Guest

theres a sofa workshop in the town where i live ... opened a few months ago. i have never seen anyone in there... is it like a highstreet advert for a website or sommat? (like EAs?)

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1 hour ago, durhamborn said:

I like DFS as a company.Great at generating free cash flow.However the management want their heads looking at paying out a big special dividend of 9.5p a share when they have leverage thats now gone over 1.5.Why is it management always say we prefer debt at 1.5 earnings etc.?.DFS could of been going into the downturn almost debt free,but instead have leverage.They nearly always produce big free cash,but if it gets really nasty whos to say they will.

Because its tax deductible. And the larger share owners wanted a cash pay out (Id guess).

 

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7 minutes ago, Errol said:

Just how many sofas does a person need? One can last 20+ years (or much longer).

 

These days you can get a nearly new one from the charity shop for a hundred quid. Basically the country is full of sofas, actually it's filling up with unwanted stuff. Got to be worried about the future for the purveyors of stuff.

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2 hours ago, TheCountOfNowhere said:

The recession is coming, like a tsunami and this time, there is nothing they can do about it.

They could put up interest rates... and squeeze the struggling debtors even more.

They could print some cash... and push up imported inflation even more.

Or they could sit pat... and just watch the UK die on its ****. :lol:

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We looked at buying a new sofa from DFS a couple of months ago, our current one is 10+ years old and is showing its age.

Visited the showroom a couple of times, picked out one we liked, but backed out at last minute. Could've had 4 years interest free on it, but decided the money would be better saved or prioritised elsewhere. We've been renting for 6 years in London now (Zone 6), together my wife and I earn 6 figures +, about 45% of our income goes on rent!

Anecdotal I know, but just shows one of the ways the cost of housing is impacting the wider economy, it can only get worse!

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7 minutes ago, Smiley George said:

We've been renting for 6 years in London now (Zone 6), together my wife and I earn 6 figures +, about 45% of our income goes on rent!

Move out of London. You could have a much better lifestyle in one of the Counties outside London - just with a 1hr commute by train both ways (which can be very civilised).

Edited by Errol

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Over 247,000 items for sofa.......more sofas out there than they know what to do with, starting at 99p.;)

Edited by winkie

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23 minutes ago, Errol said:

Move out of London. You could have a much better lifestyle in one of the Counties outside London - just with a 1hr commute by train both ways (which can be very civilised).

Would love to, but not that simple. Kids in excellent schools, wife's parents nearby helping with childcare etc.

Would've bought 6 years ago but was starting up a company with variable income, sometimes a couple of months without wages. Past couple of years all going well starting to reap the rewards, but even on 6 figure + earnings and same level of savings we could just about afford a 3-bed flat or v small 3 bed house and that would still mean nearly £500k of debt....I'm simply not willing to join in this greed fuelled nonsense!

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4 minutes ago, Smiley George said:

Would love to, but not that simple. Kids in excellent schools, wife's parents nearby helping with childcare etc.

Would've bought 6 years ago but was starting up a company with variable income, sometimes a couple of months without wages. Past couple of years all going well starting to reap the rewards, but even on 6 figure + earnings and same level of savings we could just about afford a 3-bed flat or v small 3 bed house and that would still mean nearly £500k of debt....I'm simply not willing to join in this greed fuelled nonsense!

All the unrecognised carers out there......they need to be more valued and all their work recognised towards their future state pensions........many people would be very much poorer without family help....that work of course does not mean anything in the eyes of the policy makers for all the good work that they do.;)

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11 minutes ago, winkie said:

All the unrecognised carers out there......they need to be more valued and all their work recognised towards their future state pensions........many people would be very much poorer without family help....that work of course does not mean anything in the eyes of the policy makers for all the good work that they do.;)

Couldn't agree more. And we've kind of factored that into our calculations, mind you it's not going to be long until we'll be looking after them!

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5 minutes ago, Smiley George said:

Couldn't agree more. And we've kind of factored that into our calculations, mind you it's not going to be long until we'll be looking after them!

......give and take.....the cycle of life, at some point in life we all need looking after.;)

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5 hours ago, Smiley George said:

Would love to, but not that simple. Kids in excellent schools, wife's parents nearby helping with childcare etc.

Would've bought 6 years ago but was starting up a company with variable income, sometimes a couple of months without wages. Past couple of years all going well starting to reap the rewards, but even on 6 figure + earnings and same level of savings we could just about afford a 3-bed flat or v small 3 bed house and that would still mean nearly £500k of debt....I'm simply not willing to join in this greed fuelled nonsense!

Does the Company have to be located in London. Seems to me you could live well and pay for childcare anywhere else in the country. Also London doesn't have the Monopoly on good schools. 

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11 hours ago, crashmonitor said:

Yep operating margin is 10%, not much of a buffer if they are forced to discount deeper.

I glanced at the report and on the face of it margin looked to be already dropping. I am not sure how they are setup. At a guess UK manufacturing using imported materials with stores mostly in the UK ?  

That is odd the special dividend. Furniture retailers (at least in my memory) have a habit of collapsing in a downturn.

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1 hour ago, crashmonitor said:

Does the Company have to be located in London. Seems to me you could live well and pay for childcare anywhere else in the country. Also London doesn't have the Monopoly on good schools. 

Unfortunately most of our customers are in and around London, so it does help. It's tempting, but we do actually like living here, and it's a nice area so house prices are never going to be cheap. But they've gone bat shit crazy past couple of years.

There is hope though, there are more 3/4 bed houses on the market than I've ever seen in past 5 years. Everyone trying to get out with their unearned million pound bonus. But no sales are happening and everyday the list of reductions gets longer and longer...

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1 hour ago, sPinwheel said:

Sofa so good.

Yes.

Their sales are definitely in recline.

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  • 297 Brexit, House prices and Summer 2020

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