Sofa specialist retail chain DSF has revealed the growing strength of its instore Dwell concept rollout as it plans to expand with 40 new stores.
Stated within its latest preliminary results, DFS praised the successful model as the new Dwell stores generates ‘higher revenue and profits’, whilst confirming the first 12 stores generated a c.2% like-for-like increase in DFS bookings within the associated DFS stores, benefiting from ‘increased footfall through new customers and an increased frequency of return visits’.
DFS said that the success of the concept has led to an acceleration in its investment in the Customer Distribution Centre (CDC) conversion programme, which releases additional retail space by removing DFS’s warehouse operations from stores and consolidating them into larger, purpose-built, off-site facilities.
DFS opened six new CDC’s, bringing the total to 11 – which now serves around half of its store estate, and has planned to open eight in the new financial year to complete the operation.
Once completed, DFS said it will house 40 Dwell store-in-store concepts across the UK, alongside five new Sofa Workshop stores, expecting each of the CDC conversions to generate £650k-£700k of incremental EBITDA including both the ‘benefit of the incremental Dwell profitability’ and also the ‘impact of DFS LFL sales growth’, up from its previous guide of £500,000.
With the scale and pace of the roll-out, DFS said there would be ‘significant pre-opening costs’ including staff recruitment and training.
DFS said within its report ended 30 July 2016: “We believe the incremental benefits we are currently seeing will be offset by implementation costs however from FY18 and into FY19 we expect there will be a £3-4m increase in EBITDA in aggregate above the previous guidance given for this growth lever.”