Sofa seller DFS secures £250m credit facilities amid wider market difficulties

Furniture retailer DFS has secured £250m of new credit facilities in a move it says shows confidence in the business.

The Doncaster firm, which runs 118 showrooms across the country, told investors on the London Stock Exchange that it had negotiated a new £200m revolving credit facility and a £50m issue of US Private Placement notes. Together, the sums replace a prior £215m revolving credit facility.

The £200m facility, which was agreed with existing banking partners, will mature in September 2027 and includes an option to extend a further 16 months subject to lenders’ agreement. The terms are in line with the previous £215m facility. Meanwhile the US Private Placement notes will mature in September 2028 (£25m) and September 2030 (£25m).

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John Fallon, the group’s chief financial officer, said: “The successful renewal of our lending facilities is a strong positive endorsement of the confidence the group maintains with our long term banking partners and the wider credit market. It provides additional liquidity over the longer term as well as flexibility to pursue all our strategic objectives.”

The new lending facilities follows DFS’ reporting earlier this summer that it still expected around £30m pre-tax profits in its 2023, despite worse than anticipated market conditions. A trading update for the year to June 25 included notes on consumer demand impacted by the economy, with market volumes down by between 15%-20% across the year.

At the time of the update, the firm hailed a record 38% market share, which it said would give it a good position when the market recovers. Looking at the start of its 2024 financial year, DFS said: “We currently expect market volumes to decline by mid-single digits for the full year, however, the economic outlook remains uncertain. To that end the business has been prudent in its planning, is taking actions to maximise operating cashflow through continuous margin improvement, delivering cost savings and reducing capital expenditure.

“Despite the ongoing pressure on market volumes, we expect underlying profit in FY24 to be slightly above FY23 levels, supported by the group’s leading brands, scale and well invested integrated retail proposition.”

Original artice – https://business-live.co.uk/all-about/yorkshire-humber

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