Overstocking hits bottom line at online furnishings retailer

Online furnishings and homeware retailer Danetti has reported sales of more than £30m although losses amounted to over £1m.

According to its latest filed accounts for the 18-month period ended 30 September 2022, total sales generated £34.9m, up 114% from £16.3m, although this was compared to a 12-month trading period.

Pre-tax losses for the period under review stood at £1.4m, significantly down from its profit of £1.8m in 2021.

Danetti, which also operates a showroom in Bracknell, Berkshire, said: “Following strong growth in the prior year, the company continued to experience strong demand for its products in the first part of the period as consumers prioritised investment in the home.

“During this period there was reduced competition for customers’ disposable spend due to the government imposed Covid-19 restrictions on the service sector.

“A loss was made in the period due to short term cost pressures resulting from the emergence of the UK from government pandemic restrictions. The company experienced some overstocking due to the general supply chain disruption from Asia and this led to increase warehousing costs and more aggressive promotional activity.

“Product margins were further reduced by the significant increase in freight costs, which were a feature of the early part of the period.

“Like many other companies operating in the online home furniture sector, the company experienced an acceleration of revenue growth during the pandemic. However, the pandemic also created challenges as the UK emerged from the associated restrictions.

“There was widespread disruption to supply chain logistics and there was subsequently a softening of demand as the physical retail and service sectors were reopened.

“The company has taken steps to manage down its stock levels and at the same time improve customer experiences on lead times. It is well placed for further growth as demand patterns revert to a more stable position post pandemic.”

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