U.K. Retailers Suffer Again With DFS, THG and John Lewis Updates
2022.09.15 05:57
By Geoffrey Smith
Investing.com — The gloom over the U.K. retail sector deepened on Thursday, with profit warnings from e-commerce group THG and high street stalwarts John Lewis and DFS Furniture.
THG (LON:) shares fell 18% to a new record low after the company’s focus on keeping prices down to maximize market share growth led to an operating loss of over 89 million pounds in the first half of the year. The performance was made worse by the high cost of breaking into new markets in Asia and heavy investment in new fulfillment centers.
The company also cut its forecasts for the full year, now predicting 10%-15% sales growth and adjusted earnings in a range around 115 million pounds this year. It had previously seen sales growing at up to 25% (adjusted for the closure of its businesses in Russia and Ukraine).
Underlying earnings before interest, taxes, depreciation and amortization fell by more than 60% in the first half from a year earlier to 38.2 million pounds ($43.9 million). Revenue growth slowed to 12% due to tough year-earlier comparables, but was still up 64% from two years ago.
Shares in DFS (LON:) also plummeted 13% to test their pandemic-era lows after the furniture chain said that business “softened markedly” in the first three months of its fiscal year ending June 2023. It warned that pretax could fall by as much as two-thirds over the coming year, with orders falling as much as 15%.
Pretax profit in the year just ended had already fallen 45% to 60.3 million pounds, despite the full reopening of its stores in the U.K. Performance was hurt by costs arising from the closure of its businesses in Spain and the Netherlands, which succumbed to Covid-19 lockdowns.
Separately, John Lewis Partnership, the staff-owned group that owns the U.K.’s most popular department stores and its upmarket Waitrose supermarkets, said its net loss more than tripled to 99 million pounds in the first half of the year as it, like THG, tried to absorb the impact of higher input costs. The group was also hurt by the steady erosion of Waitrose’s market share as falling real incomes prompted consumers to switch to cheaper rivals.
John Lewis blamed the figures on the U.K.’s “unprecedented cost-of-living crisis”.
