DFS Furniture plc (DFS) Earnings Call Transcript

Good morning, everyone, and welcome to the DFS Furniture plc Full Year Results Presentation for Financial Year 2026. I'm pleased to be here today alongside our new CFO, Dominique Highfield, to take you through our presentation. So turning to the agenda for today's session. I will summarize the highlights of the year and then hand over to Dominique, who will share an overview of the financials. From there, I will outline our updated strategy and the capabilities that underpin our competitive advantages as a group. And then I'll also provide an update on our outlook for the full year ahead. Finally, Dominique and I will take questions from the analysts that are here with us in the room. So turning to FY '26. We delivered a strong performance in FY '26 with our strategy delivering clear tangible results. Despite a subdued market backdrop, we generated revenue growth of 2.6% and met our strategic goal of 58% gross margin. The commercial discipline flowed to our bottom line. We delivered on our upgraded guidance with underlying profit before tax and brand amortization of circa GBP 45 million, up GBP 15 million year-on-year. Importantly, this operational momentum translated directly into cash and balance sheet strength. We generated GBP 40 million of free cash flow, allowing us to pay down bank debt and reduce our leverage ratio to 0.9x, down from 1.4x at the end of FY '25. Now this performance and capital discipline has given the Board confidence to reintroduce our ordinary dividend. Turning to our operational health. The business is performing at record levels. Customer satisfaction has hit new highs with DFS customer NPS scores up 7% year-on-year. This is powered directly by our exceptional teams. Guided by our new DFS Group purpose and values, colleague engagement scores have increased 19% year-on-year. Looking further ahead to growth opportunities, we are focused on what we can control from extending our market leadership in core upholstery, which is currently at record levels of over 40% to unlocking further expansion in the home market and finally, monetizing our platforms. Successful trial investments over the past year have validated our strategy and reinforced our confidence levels in our medium-term targets. In addition, when the upholstery market starts to normalize, our operational gearing will result in a high profit drop-through and strong cash flow generation, and our sights are fixed on our medium-term targets of GBP 1.4 billion of revenue and 8% PBT margin. So in summary, our business is in great shape. We're well positioned. We have our scale, an updated growth strategy, and it's paving the way for our medium-term potential to be unlocked. With that, I'll now hand over to Dominique to walk us through the financials.

Thanks, Tim. Before I get into the results, a brief reflection of my first 5 months. I joined DFS because I love customer-focused retailers because of the culture Tim and the team have built and because I believe DFS's sit test makes an AI-proof bricks-and-mortar offering. Everything I believed coming in has been confirmed and what's genuinely impressed me since joining is how data-led this relationships-led business actually is with a superb understanding of its customer and real pace on responding to how that customer now searches, whether that's ChatGPT or Google. Having joined 2 months before year-end, I want to start by recognizing Tim and the team's execution behind these results, and I'm delighted to be here today to bring them to life for you. Turning to our financial results. We see robust P&L progression and strong cash generation. Revenue rose by 2.6% to just under GBP 1.06 billion. Combined with 160 basis point gross margin expansion and continuous cost discipline, underlying PBT increased by GBP 14.7 million to GBP 44.9 million. A key highlight of the financial year is the continued cash performance. We generated substantial free cash flow and reduced bank debt by GBP 38 million to GBP 69 million. Consequently, our bank leverage has fallen significantly to 0.9x, positioning us within our 0.5 to 1x target. I'll unpack the specific drivers over the next few slides. So let's get on to order intake and revenue together. The group delivered a resilient performance overall. Group order intake was down 1% year-on-year, but slightly ahead of the wider market. Performance was split into 2 distinct halves, a strong first half, plus 2.3% order intake, which led to an upgraded profit guidance in January, followed by a softer second half due to macroeconomic pressures. Despite the slowdown, strong margin and cost control enabled us to deliver upgraded profit guidance. Trading across the period also highlighted a divide in how consumers are spending. Higher-income consumers remained active, while cost of living pressures caused more cautious spending amongst others. And against this backdrop, the DFS brand delivered full year order intake of minus 2% year-on-year. Our exclusive brand partnerships, however, continue to resonate with consumers in spite of subdued demand, generating positive year-on-year growth. Our home proposition also grew by 10.9% year-on-year, driven by expanding brand partnerships, targeted marketing and increased capacity like the new mezzanine at DFS Stockton. Sofology outperformed the wider market with plus 2.6% order intake growth. This is driven by a more affluent customer base, strategic range refreshes, its first ever sale event and an expansion of our 4-year interest-free credit. Importantly, what this performance across brands shows us is the value to DFS Group of having a multi-brand portfolio. FY '25 was a tough comparator, having gained substantial market share. So when we step back, our 2-year performance highlights the underlying business strength with 2-year group order intake up 9.1%. Gross sales grew 2.3% year-on-year, outpacing the 1% decline in order intake due to our made-to-order model lag. And revenue growth marginally exceeded gross sales due to lower interest-free credit subsidy costs from downward SONIA trends in the first half. So overall, the group delivered a strong full year order intake performance, building on the significant share gains achieved in the prior year. Moving on to gross margin. Our gross margin as a percentage of revenue improved by a further 160 basis points year-on-year to 58.1%, marking the group's fourth consecutive year of gross margin progression and achievement of our 58% target. Whilst this waterfall shows the progression of margin rate, it's important to note the increased sales volume generated an incremental GBP 11 million of gross margin year-on-year. Product margins increased 70 basis points and contributed an incremental GBP 12 million. And this is directly supported by our successful consolidation of our buying teams under a single group leadership structure and unlocking efficiencies through supplier rationalization. We have also achieved productivity gains within our own factories. This is a result of continued cost-conscious culture over the previous few years. Margin tailwinds further aided our rate with freight cost reductions contributing GBP 5 million as container rates normalized and a favorable U.S. dollar exchange rate, providing a GBP 4 million benefit being 0.03 favorable year-on-year. In summary, a strong gross margin performance, which saw us achieve our 58% target. Turning to operating costs. Underlying operating costs totaled GBP 569 million, an increase of 3%. Volume-related costs such as variable distribution costs and sales commissions rose GBP 3 million, in line with revenue. Statutory inflationary headwinds of GBP 11 million were concentrated in employment costs. We strategically invested into our brands with an extra GBP 7 million of targeted brand marketing, notably supporting Sofology's return to television advertising and expanding our home proposition. We also committed GBP 6 million into growth and technology investments, including our new Sofology Carlisle showroom. These investments were partially self-funded by GBP 4 million of further cost efficiencies and disciplined savings. Finally, as a result of continued strong cash generation and concentrated capital expenditure, our depreciation and debt charges reduced by GBP 6 million. We expect to reduce interest charges in the future as we continue to reduce our debt levels. So in summary, group cost increases were contained to 3% in spite of inflationary pressures and investment into future growth due to continued debt reduction and strong cost control. Turning to cash flow. We delivered a cash inflow of GBP 40.3 million, underpinned by a robust EBITDA increase of GBP 5.7 million. We maintained disciplined investment in future growth with capital expenditure of GBP 27.6 million, funding store refurbishments across both retail brands, a new Sofology showroom and the expanding of home mezzanines. Concurrently, lower average net debt reduced interest payments by GBP 4.9 million. We generated a working capital inflow of GBP 10.2 million, driven by longer supplier payment terms and a small year-end timing benefit. And whilst this is lower than the FY '25 inflow of GBP 24.9 million, we benefited in timing there from a strong second half trading ramp-up and FY '26 reflects the continued disciplined management. Reflecting the strength in balance sheet, we were pleased to reintroduce a modest interim dividend of 1 pence per share, a GBP 2.3 million cash outflow in the period. Importantly, cash management substantially reduced closing net debt by GBP 38 million to GBP 69 million, bringing leverage down to 0.9x. Now I'd like to reiterate our capital allocation framework designed to balance the continued strengthening of our balance sheet with strategic growth investments and sustainable shareholder returns. Our first priority is to maintain a healthy balance sheet. We have made excellent progress here, bringing our leverage ratio down over 2 years from 2.5x down to 0.9x. Debt levels have not only halved over the last 2 years, but now place us within but towards the top end of our 0.5 to 1x target range. Continuing to reduce debt levels remains a key focus. Also a key focus is our second priority, supporting organic growth. We expect our maintenance capital spend to track at approximately 2% of revenue. For FY '27, we anticipate a total CapEx spend of GBP 27 million to GBP 32 million, with growth investment focused strictly on high confidence, high-return strategic projects that underpin our medium-term opportunities, which Tim will shortly talk through. Finally, with the balance sheet strengthened, the Board is pleased to recommend a final dividend of 2 pence per share, bringing the reinstated full year dividend to 3 pence per share. This importantly reflects our confidence in the business, our focused deleveraging and disciplined investment for long-term growth. So what do I want you to take out of my presentation today? We did see consumer demand impact order intake in the second half. But importantly, the performance has strengthened slightly heading into FY '27. And when we look internally at the proof points of our results, the group achieved its upgraded guidance while slightly outperforming the market due to our winning customer proposition and strategic focused execution. This combined with gross margin progression and cost discipline, this drove PBT up 49% year-on-year. The upshot of which has meant strong cash generation, meaningful debt reduction and the reinstatement of sustainable shareholder dividends. Thank you for listening. I'll hand over to Tim.

Thanks, Dominique. Let's turn our attention to strategy and operational review. So the resilient financial results that Dominique just presented are the direct consequence of the strategic progress we've made. And as we look forward, we've taken the opportunity to make some refinements to our strategy, which I wanted to talk you through now. So turning to our updated growth strategy. Everything now begins with our new group purpose, which is furnishing better lives together. This new purpose frames our growth strategy. First, we'll play to win in the core sofa market by protecting our market leadership position and penetrating underserved customer segments and geographies where we still see clear space for growth. Second, we are building and scaling our home business. While broader home categories represent a total of GBP 5 billion market opportunity, we are initially targeting the GBP 3 billion beds and mattress segment. By leveraging our brand trust, our marketing power and our third-party partnerships, we believe that we can capture more furniture spend and increase customer frequency beyond the longer sofa purchase cycle. Third, we are monetizing our logistics platform, the Sofa Delivery Company, to serve other smaller furniture retailers as a profitable revenue engine. To successfully deliver across these 3 growth pillars, our business relies on 3 key enablers: our scale and vertical integration, our approach to data, technology and AI, and our unique people and culture. By combining these enablers, we aim to create distinct competitive advantages that unlock sustainable long-term value. Now before I go through the strategy in more detail, I thought it's worth providing some context as to how we see the market share. Our group market share by value, as shown here on the dark green line at the top of the chart has increased consistently over time to over 40% for the calendar year 2025 as measured by global data. Now we took share mainly from retail park competitors from 2017 to 2022 with a significant increase in '21 as a key competitor went out of business. More recently, we've taken share from across the competitor set. Our retail park competitors, the dotted green line here, have recovered some of their share from 2022 onwards at the expense of home multiples and online pure plays. You can see the share of home multiples have been relatively flat over time with some new entrants emerging and some deprioritizing upholstery. The share of online pure plays peaked in the COVID pandemic and returned to normalized levels thereafter. And then you can also see finally the independent share reducing, but then it's flatlined from 2022 onwards. I guess the key takeaway here is that whatever the environment that we've been operating in, we've strengthened our market leadership position and are currently now at record levels of over 40%. That's 3x the size of our nearest competitor, and we do see further increases in future. Now on to market drivers and market size. Our market is heavily impacted by consumer confidence levels. Around 80% of sofa purchases are replacements and consumers need to feel confident to make that big ticket purchase. You can see that correlation on the right-hand chart, where we've plotted consumer confidence against market size back to 2006. Since around 2022, we all know that consumer confidence has been running at relatively low levels as a result of heightened inflation and interest rates, resulting in cost of living pressures as well as the ongoing geopolitical uncertainty. The remaining 20% of purchases are linked to house moves. A buoyant housing market results in more upholstery demand. As you can see on the bottom left chart, property transactions were actually recovering and in growth as interest rates started to reduce from their peak. However, for the last 6 months, interest rates have held flat for some time and housing transactions have been relatively subdued. Finally, you can see on the right-hand chart, the market value is estimated at GBP 3.1 billion for calendar year 2025. And we've tried to illustrate here the inflation-adjusted market size, which reflects retail price inflation over the last few years, and that indicates that market volumes are still below -- 20% below normalized levels. So the market has a long way to recover. And when it does, given our operational leverage and our market share in our business, the profit opportunity for this group is significant. So let's consider the medium-term opportunity as we see it, which is a 4- to 5-year time horizon. While we'll obviously navigate through the near-term macro challenges, our future destination remains unchanged. Our strategic building blocks provide a clear visible road map to our medium-term financial targets. Now our confidence in these targets is anchored in the fact that we don't require a full recovery in the upholstery market to achieve them. Our progression to a 6% PBT margin and GBP 70 million of PBT is built entirely on controllable levers. First, we will drive upholstery volume growth by leveraging our position as the clear market leader to capture further market share. We've seen good performances from recent investments such as the new Sofology Carlisle showroom and the Bolton refurbishment, and we see an opportunity to add at least 10 new Sofology showrooms with limited cannibalization. We also see an opportunity to enhance our Sofology like-for-like estate through further showroom enhancements and refurbishments. We're going to continue to invest in the DFS range expansion and development, including exclusive brands where we see opportunity to serve underrepresented customers and geographies. Second, we will scale our home proposition, building on the 11% growth achieved this year, capturing non-upholstery spend across bedrooms and living rooms. This provides a GBP 5 billion TAM opportunity with our primary focus being to capture a greater share of the GBP 3 billion beds and mattresses segment. With the foundational infrastructure now all in place, we are well positioned to scale. We've expanded our high-profile exclusive brand partnerships into our home categories, and this continues to differentiate our offer, particularly in the beds and dining areas. We are confident we can deliver an incremental GBP 100 million of revenue through increasing our physical offer via mezzanine investments in DFS, supplemented by an enhanced online proposition. Now following the success of trial mezzanine investments such as DFS Stockton and Aintree, we see scope to add a further 20-plus mezzanines. Now these costs around GBP 1.6 million of CapEx each, but we've seen an uplift in showroom revenue of circa 25%, paying back in 3 to 3.5 years and delivering an IRR in the range of 25% to 30%. We have 5 of these now and good proof points on which to build a good business case. Third, we are monetizing our logistics platform, the Sofa Delivery Company, opening up a new business-to-business profit stream with minimal capital investment required. We are currently offering our leading 2-person delivery service to 3 businesses, and we now have the technology and scale to integrate more at scale. Now these growth levers provide the route to an additional GBP 25 million of PBT, at which point we'd be operating at around 6% PBT margin. Delivering this will be supported by the GBP 27 million to GBP 32 million of total capital expenditure that Dominique outlined for FY '27, increasing to around GBP 35 million over the medium term per year to fully fund these opportunities. Finally, as we stated before, the upholstery market volumes are around 20% or more below the long-term average. Now given our current market share and our operating gearing, we now only need 7% of that 20% to recover to achieve our 8% PBT margin and deliver over GBP 100 million of PBT. Moving on to our key enablers, starting with scale and vertical integration. Scale is a fundamental competitive advantage for the DFS Group. As the clear market leader of the upholstery market, our integrated end-to-end platform gives us structural and commercial advantages across the value chain and underpins our 58% gross margin. The scale secures exclusive supplier relationships, which allows us to bring in highly differentiated and exclusive product ranges to our customers. For example, exclusive brands in DFS now represent 45% of the total brand sales mix, featuring household names like French Connection, Joules, and Ted Baker, and we're really proud to work with them. We have also recently expanded these partnerships into our growing home category, and we're pleased with the performance we've seen in those brands to date. Our scale also gives us early access to product innovation. We're embedding the very latest technology directly into our furniture to drive higher average order values. And finally, on scale, it enables us to secure products at a relatively favorable cost of goods terms. And this, together with the fact that we run our own factories, and we understand the cost of every element of the sofa underpins our 58% gross margin. Scale in terms of marketing, we've recently teamed up with Craig Revel Horwood for Sofology's 'So Fussy' campaign, and this has helped increase the brand awareness of that brand by 5% year-on-year. Moving on to data, technology and AI. Now we've always viewed data and technology as critical drivers of our customer propositions and also our operational efficiency. And I'll start with a little bit of how we bring this to life across the customer journey. We inspire our customers with innovative products such as our Cinesound collection, which brings integrated audio and cinema-style comfort directly to your home. That brand is doing fabulously well. In the discover phase, tools like the Bloomreach personalization and augmented reality in-room viewing bridge that gap between the digital and the physical in-store test -- sit test. We also see generative engine optimization as a huge opportunity for our group, given the years of investment and initiatives we've made to improve our websites, our digital marketing and our data. We're already visible on 88% of GEO searches in DFS. When it comes to transacting, features like our soft credit check capability and complete-at-home ordering where orders can be started in store and completed at home remove friction from the customer journey. And support doesn't end at the point of order. Our AI chatbots and intelligent call routing deliver fast, proactive customer care all the way through to final delivery, helping support our record NPS scores. Now underpinning this entire customer journey are proven AI capabilities. And our philosophy at the DFS Group is to use AI to empower our people, believing ultimately that the human touch remains our ultimate differentiator. We use AI to reduce friction, freeing up our teams to focus on high-value customer interactions. And we're already seeing big wins on that where we are today. Across logistics, our proprietary Apollo routing engine uses real-time data to optimize final mile schedules for the Sofa Delivery Company, driving a 20% reduction in overtime costs alongside an 18% cut in road miles. In terms of colleague capacity, automated query tools support 17,000 customer tickets every month while cutting admin handling times by 5 minutes per interaction. Looking forward, the accelerating pace of this technology creates massive opportunities as we shift from an AI-assisted to an AI-enabled business. Firstly, around our people. We're upskilling our technology teams, allowing them model-agnostic tools but within a clear governance framework. Second, from the front end of the business, we're using AI tools in both web search, total search and our showrooms to drive that search-to-sale conversion and finally, for back-office efficiency. Now real value here, we believe, comes from reimagining end-to-end processes and moving from AI-assisted tasks to full AI automation, which we think will boost capacity and drive down costs. Moving on to culture. Building a high-performing resilient business is hugely enabled by an open, inclusive and customer-focused culture. Now we focus on this hugely as we understand that our people are our greatest asset and are right at the heart of our business. This year, we launched a new cultural framework designed and led by our next generation of leaders in FY '26 as part of our leadership development program. And this brings all areas of our group under a single core purpose, which is now defined as Furnishing better lives, together. This reflects our collective belief that our responsibility extends far beyond just selling furniture. We're equipping people for better everyday living in their homes and communities. Our purpose is supported by 3 core values: customer at our heart, better never stops and everyone together. And our purpose is reinforced by our newly realigned DFS Group charity partnership with BBC Children in Need, which addresses furniture poverty to help vulnerable families turn a house into a home. We have thriving colleague networks, each sponsored by a senior executive, and these remain central to advancing our inclusion agenda by connecting like-minded colleagues, driving meaningful change across all aspects of the group. This year saw the launch of our seventh network, the Mankind Network, bringing together men across the group to support one another and champion positive mental health. Now the impact of embedding this culture is clearly visible in all of our metrics. Our latest internal, "Your Say" survey showed a further strengthening in workforce sentiment with overall colleague engagement rising 19% year-on-year. Our teams are more aligned, more motivated than ever before, and we can't thank them enough for their dedication and passion for our group. Turning now to outlook. Still, I want to address both the near-term realities of the trading environment, but also reiterate the confidence we have in the medium-term potential of our group. Starting with the near term on the left-hand side of the chart. Clearly, macroeconomic pressures persist and the consumer backdrop remains delicately balanced. Our core planning assumption for the whole year is that the market will remain relatively flat. Against this backdrop, we expect to deliver moderate profit growth year-on-year, driven by our compelling customer propositions and a continued focus on cost control and capital discipline. We remain comfortable with the company compiled consensus, which currently sits at around GBP 48 million of profit before tax. Looking at our current performance, trading through the first 12 weeks has been in line with our expectations with order intake at minus 2.5% year-on-year. We believe this represents an encouraging performance in light of the exceptional weather across July and August, and it's actually an improving trajectory relative to the second half of FY '26. Finally, on cash, as Dominique outlined, our CapEx guidance for the year is set between GBP 27 million and GBP 32 million of cash CapEx, and that will be focused on proven high-return projects that support our growth agenda. Looking beyond the near term, we believe the group is exceptionally well placed to deliver the medium-term financial targets. We have multiple levers within our control, growing our upholstery market share, growing our share in home and monetizing our platforms; and second, market demand. The business is now in the strongest position it's ever been to capitalize when the market starts to recover. So in conclusion, we've delivered a strong financial performance in FY '26. We've grown profit significantly, achieved the gross margin target, generated strong free cash flow and deleveraged our balance sheet further. Operationally and from a customer perspective, the business is in great shape. All of our internal operating metrics are flashing green, and we will strive to get better under the better never stops mindset. We have a new group purpose and values, an updated growth strategy, a highly efficient vertically integrated platform. We've got clear scale and growth levers ahead of us to achieve our profit and cash flow targets. Finally, I'd like to thank our entire team across our stores, our factories, our distribution centers on the road, our customer service teams and our support centers for their exceptional execution this year. Thank you always for your time this morning. Dominique and I will now be very happy to take any questions you may have.

Ben Hunt from Panmure Liberum. Just intrigued if you could sort of flesh out a few more details on Carlisle and Bolton and Stockton with the mezzanine. Scrolling down some of the numbers, it looks like you're sort of making pretty good margin on those mezzanine sales that you were talking about. Why only 20? Is that a sort of a particular -- is there anything constraining that? Or I mean, given the returns, it feels like you want to do as more as you can, but any findings or anything you can, sort of, wax lyrical on that would be great.

Wax lyrical, that is a great opportunity. Thank you.

It is a bit short, isn't it?

Careful what you wish for, Ben.

Yes. Sofology, we've always -- I think we have 56 stores in Sofology now. And we -- from all of the data we see, we have huge amounts of data because DFS has 115, so we know the towns and cities where there is white space of Sofology. We have all the customer data as the sort of demographics that a Sofology store would attract. And Carlisle is a classic example. Near stores geography-wise, you're talking Gateshead and you're talking backing into Scotland. So we can see the white space. We're looking for the right micro location and as soon as we put that down there with the right sort of marketing, we see good profit opportunities. Payback on that sort of investment is in the region of 2.5 to 3 years, and we see at least 10 locations across the U.K. to put those down. I think the key thing for us is finding the right micro location. So we know all of the towns and cities, it's just finding the right locations in the next few years. But good payback on them, clear returns on capital, so happy with that. The Bolton refurbishment is taking one of our really, really strong stores in Bolton, great retail park and just giving it what we've learned from a DFS in terms of reformat, refreshing it, working with the teams to create a really lovely environment for customers, and we do see an uplift in sales performance. And typically, when we've done it in DFS, we've seen at least a 5% uplift in like-for-like. So that's a good -- another good business case for us. Stockton is 1 of 5 mezzanines we've put into DFS stores. And now what we've seen consistently, just to reiterate the numbers, is around a 25% increase in sales in that particular location. And the investment is around GBP 1.5 million, GBP 1.6 million. But what you also have, and this is quite the reason Ben around the constraint on them is you are in the store and you're relatively disrupting that store for around 18 weeks, around 4 months. As you can imagine, putting a mezzanine in and doing it in the right way from a health and safety, and a colleague point of view, we keep the store trading. So we have to be careful about disrupting the big stores. But in terms of the returns, we're seeing 25% uplift in sales gives us a good drop-through on profit. And I think the kind of payback is around about 3.5 years, IRR between 25% and 30%. So now we've done 5 of them. We're seeing that consistent return. We've identified the stores that we'd like to go to. And I think if I -- he will be listening our Property Director. He's rubbing his hands thinking yes, we're going to be busy. I do think there's GBP 20 million at least, we said GBP 20 million plus.

Is the GBP 100 million linked to GBP 20 million? Or is that -- could go beyond?

About half of the GBP 100 million revenue growth is linked to the mezzanine rollout, and it's over a 4- to 5-year period. And we've got to balance the kind of trying to pay down the debt, making sure we're investing in across the piece, not just mezzanines, investing in our maintenance capital, investing in our showroom refurbs as well as paying returns to shareholders. So that's kind of the balance we're trying to strike, Ben, in terms of the pace of how we do the rollout of mezzanines.

Jonathan Pritchard at Peel Hunt. Two, if I may. The 58% gross margin, you've hit your target. I know you haven't set a new target. Does that mean because 58% is what you think is the right answer. And therefore, if there was a tailwind, if there was an opportunity, you might reinvest any sort of excess margin back into the product, back into the proposition. And secondly, range expansion within DFS, within Sofas. Just a bit more color on that perhaps. You talked about underpenetrated areas geographically, demographically, without being commercially sensitive, what sort of things are they?

It's a good question. I'll take that one and then you do the margin. So -- I'll give you a good example. So Central London, our market share is relatively lower than the rest of the country. Most of our stores are all sort of around the kind of the circle of the M25, Brent Cross, these sorts of places. So Central London and the flats, we all know is a huge opportunity. We can see that data. We've just launched a range in partnership with Manoir actually, called OnCloud9. And basically, imagine a sofa in a box, like a mattress in a box, and you can lift. You literally open up the box and the sofa appears. It's got no wooden frame, and it can be lifted up flat into flats, into lifts and it is this amazing sofa. And it's a hugely exciting opportunity, particularly for Central London. It's that sort of thing that we're looking at. So what we're looking at from the data is where our markets we can see every postcode that we deliver into across the country. So we can see where our market share is by postcode. So we know in Central London, big opportunity, what's the product innovation that's going to unlock that. So those products are priced GBP 699, GBP 799, great value. They actually sit beautifully and can be delivered in a box and quickly within 3 or 4 days, which is typically customers in Central London would want. Good margins, very excited about it. And that's a sort of example. Through to, you then look at some of like the Amanda Holden range, which is a big first for us in terms of a real influencer and a public figure. She's got a fantastic style and that appeals to a segment of customers that perhaps we weren't getting to. So that's how we think about using brands and looking at the data to try and unlock some opportunities.

Margin...