DFS sales up 20% as it seeks £70m, plans share sale

Shares of Doncaster-based DFS Furniture rose about 11% on Monday after it confirmed it is in the advanced stages of negotiating an additional debt facility of between £60 million and £70 million with its banks.

DFS also said it is preparing “for a possible non pre-emptive equity issue of up to 19.9% of its existing ordinary share capital” and that its online gross sales rose 20.2% over the period from March 25 to April 17, 2020. 

The new debt facility would supplement DFS’s existing bank facility of £250 million.

“This additional facility will cover the near-term working capital unwind until sofa deliveries can resume,” said DFS.

“Alongside this additional debt facility, the company is preparing for a possible non pre-emptive equity issue of up to 19.9% of its existing ordinary share capital, further strengthening the group’s balance sheet, and providing resilience for a continued disrupted trading environment.”

DFS also gave an update on trading, saying: “Since the announcement made by the company on 25 March 2020, the group’s websites have remained operational and continue to see strong momentum, with dfs.co.uk online gross sales up by 20.2% over the period from 25 March 2020 to 17 April 2020. 

“Consequently, the group’s order banks have grown to a total of approximately £192m from approximately £185m.

“The group has in place all measures that are necessary and appropriate for warehouse activities to operate. 

“Its DFS and Sofology trading subsidiaries are receiving inbound deliveries of customer orders from Far East manufacturers, and Dwell is dispatching parcels from its accessories warehouse. 

“The group intends to restart sofa deliveries once it is clear there is a safe and workable approach for two-person installations into customer homes.”

On its outlook, DFS said: “The combination of the proposed additional financing together with the operating cost mitigation measures is expected to, when agreed, give the group significant liquidity to see through an extended lock-down.

“The board is confident that the group can navigate the COVID-19 crisis and deliver its strategy over the longer term when the trading environment normalises.”