DFS to buy Sofology
DFS has exchanged contracts to acquire sofa retailer Sofology in a deal worth an initial £25 million.
In a statement, the furniture retailer said the acquisition will add a “strong distinctive” brand and business to its portfolio as it looks to build on the success of its Dwell and Sofa Workshop acquisitions.
Sofology has a network of 37 stores in the UK as well as an online store. The company’s chief executive and management team will continue to lead the business following completion of the acquisition.
Having invested £5 million in technology development over the last eighteen months, Sofology benefits from omnichannel tracking and attribution, visualisation technology and personalised marketing content delivery, which DFS said has the potential to be shared across its group.
DFS said the enlarged group might also benefit from tighter delivery radials including increased van loads. There will be no store closures following the acquisition and the store opening programmes of both DFS and Sofology will continue as planned.
The deal is subject to regulatory approval.
Sofology reported revenue of £143 million in 2016 and, following the impact of exchange rates on cost of goods sold and disruption following a rebrand, an EBITDA loss of £2.7 million. It made a statutory loss before tax of £8.9 million over the same period. EBITDA over the twelve months to 31 December 2015 was £2.9 million.
Ian Filby, chief executive of DFS said: "While the UK furniture retail market continues to be very challenging, we remain focused on making strategic progress to strengthen our position in living room furniture. This acquisition represents a clear opportunity for DFS to accelerate our proven strategy of broadening our appeal, generating substantial long-term returns for shareholders underpinned by well-understood synergies.”
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