Will DFS Furniture be able to put its feet up following Thursday’s full year results?
Given that it is a retail stock in 2018, you’d expect DFS’ chart to look a lot uglier. But while it is hardly pretty, it’s not a disaster. Starting at £2.06, it had tumbled to an all-time low of £1.71 by the end of March, only to rally back to an 11 month peak of £2.51 by mid-May.
Since then it has existed in the middle ground of those 2 poles, with a scare in mid-July as it briefly tumbled under £1.80 on the day of its pre-close update. DFS Furniture PLC now sits at a current trading price of £2.18 (28/09/2018), a 6.3% increase in around 9 months.
As mentioned, the firm’s last statement came in July, one that initially provoked a damn violent reaction before the stock eventually calmed down. You can see why. While the company said that it had seen ‘year-on-year positive like-for-like order intake momentum’ continue in Q3, the fourth quarter had been hit by the period’s ‘exceptionally hot weather’, including over ‘key trading weekends’. On top of this DFS said it also saw disruption to ships bringing made-to-orders products from the Far East.
This caused total like-for-like delivered revenue to drop 4% for the 49 weeks to 7th July 2018, leading the company to warn that full year EBITDA would be below the £82.4 million posted in 2017, not the increase to £84.5 million analysts had been expecting. It went on to say that it expects the furniture retail markets to remain ‘challenging’ in the coming 12 months.
With the stock perched between March’s lows and May’s highs, which way it turns on Thursday is likely going to be dependent on how far 2018’s profits are from 2017’s, as well as what kind of guidance it produces for the new financial year.
DFS Furniture PLC (LON:DFSD) has a consensus rating of ‘Buy’ alongside an average target price of £2.43.
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