REG - Dunelm Group plc - First quarter trading update

DunelmAnnouncement

24/10/2024 07:00

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RNS Number : 3801J  Dunelm Group plc  24 October 2024

 
 

 

24 October 2024

Dunelm Group plc

 

First quarter trading update

 

Robust sales and volume growth

 

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares
retailer, updates on trading for the 13-week period ended 28 September 2024.

 

                           Q1 FY25  YoY
 Total sales               £403m    +3.5%
 Digital % total sales(1)  37%      +2ppts

( )

(1) Digital includes home delivery, Click & Collect and tablet-based sales
in store

 

 

Highlights

·    Robust performance with total sales increasing 3.5% to £403m

·    Sales growth driven by volume and delivered against a strong prior
year comparative

·    Continued to offer outstanding value to customers, whilst increasing
gross margin by 20bps year-on-year

·    Good progress made against our strategic priorities, with our first
inner London store opening in Westfield London in H1, and AI-driven online
search now live

 

Continued volume-driven sales growth

 

We are pleased to report a robust sales performance in the first quarter, with
total sales increasing by 3.5% against a strong prior year comparative, driven
by increased volumes. Our digital sales growth was strong, up 2ppts as a
proportion of total sales to 37%, as we continue to improve our online offer.
Despite some positive lead consumer indicators, we are still seeing volatile
trading conditions. Nevertheless, we believe that we continued to gain market
share in the quarter.

 

Sales growth was broad-based across our categories, reflecting the continued
relevance of our wide-ranging customer proposition. Our sofa collections
performed especially well, with customers enjoying our curated and colourful
ranges, whilst heritage categories such as bedding also proved popular. We
also delivered our biggest student campaign yet, where a more stylish
assortment and an attractive student discount is bringing The Home of Homes to
younger consumers.

 

Gross margin

 

Gross margin in the quarter increased by 20bps year-on-year, with prices
broadly stable. As we guided at our FY24 results in September, we continue to
expect gross margin for FY25 to be between 51% and 52%.

 

Strategic progress

We made good strategic progress in the first quarter and remain focused on our
longer-term priorities: elevating our product offer; connecting with more
customers; and harnessing our operational capabilities.

 

In product, we are seeing positive results from the initial investments we
have made in our made-to-measure capabilities, where we have started to take
greater end-to-end control of the supply chain. We are pleased that the
increased choice and capability in this area has driven significant sales
growth in the first quarter.

 

We are making good progress in connecting with more customers across our total
retail system. We are excited that we will be opening our first inner London
store in Westfield London before the end of the calendar year, bringing our
unique and specialist proposition to a smaller store format, in a
high-footfall location. We remain on track with our plans to open five to ten
new superstores this year, broadly split between smaller and larger sites.

 

We also continue to improve our digital shopping experience and have recently
implemented a new AI-led product discovery function, in partnership with
Google, which enhances the customer search functionality on dunelm.com.

 

Operationally, we have further improved our Click & Collect proposition,
with over half of SKUs on dunelm.com now available for collection in store,
supported by a more efficient customer collection process. Alongside the
growth we are seeing in Click & Collect sales, we see benefits across the
total retail system with a strong level of incremental store purchases
alongside collection.

 

Summary and outlook

We are pleased with our performance in the first quarter. We have continued to
grow sales and volumes as we deliver outstanding value, and our product ranges
are resonating with customers. We move into Q2 with a strong product offer for
customers as they equip their homes for the colder months, supported by our
latest 'Easing into Autumn' brand campaign.

 

We are excited about the progress we are making against our priorities, and
have confidence in our plans to reach our next market share milestone of 10%
in the medium term.

 

Nick Wilkinson, Chief Executive Officer, commented:

"We have delivered robust sales growth over the first quarter, offering a wide
range of products for the home, at outstanding value, and this continues to
resonate with new and existing customers. As ever, relevance is central to our
offer and we were delighted by the success of our largest student campaign
yet, which was well received by customers seeking out bright and stylish
designs.

"We continue to make good progress against our strategic plans. Later this
year, we will bring our specialist proposition to inner London for the first
time, opening at Westfield London. We're excited about this and our wider
opening programme, with five to ten new superstores planned per year over the
medium term.

"Whilst we are yet to see meaningful change in underlying consumer sentiment
in our markets, we remain focused on our plans. We believe we have continued
to gain market share and, with continued strategic progress, remain confident
in our ability to reach our next market share milestone of 10% in the medium
term."

For further information please contact:

 Dunelm Group plc                                   investorrelations@dunelm.com
 Nick Wilkinson, Chief Executive Officer

 Karen Witts, Chief Financial Officer
 MHP                                                07595 461 231
 Oliver Hughes / Rachel Farrington / Charles Hirst  dunelm@mhpgroup.com

Next scheduled event:

Dunelm will release its second quarter trading update on 16 January 2025.

Quarterly analysis:

                        52 weeks to 28 June 2025
                        Q1        Q2    H1    Q3    Q4    H2    FY
 Total sales            £403.2m
 Total sales growth     +3.5%
 Digital % total sales  37%

 

 

                        52 weeks to 29 June 2024
                        Q1        Q2        H1        Q3        Q4        H2        FY
 Total sales            £389.6m   £482.9m   £872.5m   £434.5m   £399.5m   £834.0m   £1,706.5m
 Total sales growth     +9.2%     +1.0%     +4.5%     +2.6%     +5.0%     +3.8%     +4.1%
 Digital % total sales  35%       37%       36%       37%       40%       39%       37%

 

Notes to Editors

Dunelm is the UK's market leader in homewares with a purpose 'to help
create the joy of truly feeling at home, now and for generations to come'. Its
specialist customer proposition offers value, quality, choice and style across
an extensive range of c.85,000 products, spanning multiple homewares and
furniture categories and including services such as Made to Measure window
treatments.

 

The business was founded in 1979 by the Adderley family, beginning as a
curtains stall on Leicester market before expanding its store footprint. The
business has grown to 184 stores across the UK and has developed a successful
online offer through dunelm.com which includes home delivery and Click &
Collect options. 155 stores now include Pausa coffee shops, where customers
can enjoy a range of hot and cold food and drinks.

 

From its textiles heritage in areas such as bedding, curtains, cushions,
quilts and pillows, Dunelm has built a comprehensive offer as The Home of
Homes including furniture, kitchenware, dining, lighting, outdoor, decoration
and DIY. The business predominantly sells specialist own-brand products
sourced from long-term, committed suppliers.

 

Dunelm is headquartered in Leicester and employs c.11,500 colleagues. It has
been listed on the London Stock Exchange since October 2006 (DNLM.L) and
the business has returned c.£1.5bn in distributions to shareholders since
IPO(3).

 

(3) Ordinary dividends plus special distributions

 

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