REG - Dunelm Group plc - Full year trading update

DunelmAnnouncement

21/07/2022 07:16

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RNS Number : 2683T  Dunelm Group plc  21 July 2022

 

21 July 2022

Dunelm Group plc

 

Full year trading update

 

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares
retailer, updates on trading for the 13-week period ended 25 June 2022 and for
the full year.

 

                           Full year FY22(2)  YoY      Q4 FY22  YoY
 Total sales               £1,552m            16%      £358m    -6%
 Digital % total sales(1)  35%                -11%pts  37%      +0%pts

( )

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

(2) For statutory purposes, FY22 will include a 53(rd) week. We will disclose
our preliminary results on a 53-week basis.

 

Highlights

 

·    Strong performance with full year sales and profit before tax
slightly ahead of analyst consensus(3)

·    A bigger and better business post-Covid with total sales more than
40% higher than FY19, driven by significant market share gains and reflecting
the strength of our total retail system

·    Solid performance in Q4 against tough comparatives

 

(3) Company compiled consensus range of analysts' estimates for FY22 PBT on a
52-week basis is £195m to £212m, with average consensus of £207m. FY21 PBT
was £158m.

 

Strong sales growth across the total retail system

 

FY22

Sales for the full year of £1,552m were 16% higher than FY21 and 41% higher
Yo3Y. Digital sales of £537m were more than 2.5x higher than pre-Covid
levels(4), when the digital sales mix was 20%. The full year digital mix of
35% was 11%pts lower than FY21, reflecting the fact that only home delivery
and Click & Collect services were available when our store estate was
closed for over one third of FY21.

Total sales includes significant market share gains(5), reflecting the
strength of our total retail system and the substantial development of our
digital capabilities and homewares proposition over the last three years.

Q4 FY22

Sales in the final quarter were 6% lower than in Q4 FY21 and slightly ahead of
analyst expectations. Strong sales in the comparative period were driven by
pent-up demand after the re-opening of our stores in April 2021, following the
third national lockdown (Q4 FY21 growth of 44% on a 2YoY basis). This impact
was partially offset by the return of our Summer Sale to its usual timing in
June. Digital sales made up 37% of total sales in the quarter.

 

(4) The pre-Covid period is represented by FY19 when digital sales included
home delivery and reserve & collect.

(5) Dunelm sales growth of 16% compared to FY21 (including benefit of store
closure period in the prior year), GfK Leaderpanel combined homewares and
furniture (excluding low-participation categories) decline of 4%. Compared to
the pre-Covid period, Dunelm sales growth of 41% versus FY19, GfK Leaderpanel
combined homewares and furniture (excluding low- participation categories)
growth of 6%.

 

 

Strong profit performance

 

We expect that profit before tax for the 52-week period will be slightly ahead
of analyst consensus of £207m. This performance reflects both the
particularly strong profitability in H1, when store sales bounced back
following re-opening, and robust trading in the second half.

Gross margin rate for the full year of 51.2% was 40bps lower than FY21,
primarily due to high customer participation in the June 2022 Summer Sale
event(6).  We anticipate gross margin returning to a long run average in
FY23.

We will report our full year results in September on a 53-week basis for
statutory purposes, with disclosures for the comparable 52-week period.

(6) Our Summer Sale event usually takes place in the final month of the
financial year. In 2021, the Summer Sale was delayed by one month and as a
consequence FY21 included only one Sale event (our Winter Sale) while FY22
included three events.

 

Business development

 

We are committed to long-term decisions as we develop our business. In the
quarter we continued to invest in our proposition and capabilities: opening
two new and two refitted stores, releasing new digital functionality to make
it easier and more convenient for our customers to shop, and strengthening our
product capabilities, especially in curtains and blinds.

 

Summary

We are pleased with our performance in FY22 and trading in the first half of
July has got off to a solid start.

Dunelm has a growing customer base and broad appeal, offering customers
unrivalled choice, quality and value. Our wide product range, which includes a
variety of everyday essential items, delivers value at all price points, with
a relatively low average item price.

We have a strong and advantaged business model and a product range which
benefits from being  largely own brand and not highly seasonal, and which is
sourced mainly via our committed suppliers. Our total retail system combines
the advantages of physical and digital propositions with local, friendly and
expert service, which enables us to offer great value to customers.

Whilst Dunelm is not immune to the impacts of inflationary pressures on the
consumer, we have demonstrated resilience in tougher conditions. We have a
strong  operational grip across the business, and a track record of learning
and adapating to changing environments, historically emerging stronger
following periods of consumer uncertainty.

We have consistently delivered market share gains over the long term, and
believe we have a significant opportunity to further expand our leading
position. The strong cash returns we generate provide the ability to invest
for long-term growth, by continuing to adapt and evolve our customer
proposition.

 

Nick Wilkinson, Chief Executive Officer, commented:

 

"Dunelm is a much bigger and stronger business than before the pandemic, with
sales over 40% higher, due in large part to the huge strides we have made to
develop our digital capabilities. Our growth continues to be driven by
increasing market share as our customer base further expands.

"The macro outlook remains uncertain and we cannot predict exactly how
consumers will respond to the increasing pressures on their finances. We are
currently seeing customers adapt to this environment in their own ways,
utilising  the breadth of our offer and price points across homewares; value
and choice has always been at the very core of Dunelm, and we are intensely
focused on continuing to strengthen this for our customers.

"The business has successfully navigated previous periods of consumer
uncertainty. With the inherent strength of our business model and strong
operational grip, we have never been more confident about our ability to make
the right long-term decisions for all of our stakeholders and to continue to
grow our market-leading position."

 

For further information please contact:

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

 Karen Witts, Chief Financial Officer
 MHP Communications                                 07710 032 657
 Simon Hockridge / Rachel Farrington / Pete Lambie  dunelm@mhpc.com

Next scheduled event:

Dunelm will make its preliminary results announcement on 14 September
2022.

Quarterly analysis:

                        52 weeks to 25 June 2022
                        Q1        Q2        H1        Q3        Q4        H2        FY
 Total sales            £388.8m   £406.8m   £795.6m   £399.0m   £357.5m   £756.5m   £1,552.2m
 Total sales growth     8.3%      12.9%     10.6%     68.6%     -6.0%     22.7%     16.2%
 Digital % total sales  33%       33%       33%       35%       37%       36%       35%
 Gross margin movement  -10bps    +160bps   +80bps    +30bps    -320bps   -150bps   -40bps

 

                        52 weeks to 26 June 2021
                        Q1        Q2        H1        Q3        Q4        H2        FY
 Total sales            £359.1m   £360.4m   £719.4m   £236.6m   £380.2m   £616.8m   £1,336.2m
 Total sales growth     36.7%     11.8%     23.0%     -16.8%    101.7%    30.4%     26.3%
 Digital % total sales  30%       41%       35%       93%       37%       59%       46%
 Gross margin movement  +100bps   +10bps    +50bps    +30bps    +460bps   +220bps   +130bps

Notes to Editors

 

Dunelm is the UK's market leader in homewares, with a specialist offering
for customers across multiple categories via its 177 predominantly out-of-town
superstores and website, dunelm.com.

The business was founded in 1979 as a market stall, selling ready-made
curtains. The first shop was opened in Leicester in 1984, with the first
superstore opening in 1991. With a vision to become the 1st choice for
home, Dunelm offers quality, value and style throughout its extensive
product range, alongside services such as Home Delivery, Click & Collect
and Made to Measure window treatments. From its textiles heritage in areas
such as bedding, curtains, cushions, quilts and pillows, Dunelm has
broadened its range into categories including furniture, kitchenware, dining,
lighting, outdoor, craft and decoration. Its c.50,000 product lines include
specialist own brands and labels such as Dorma and Fogarty, sourced from
long-term committed suppliers.

Dunelm's purpose is 'To help create the joy of truly feeling at home. Now
and for the generations to come'. The business is headquartered
in Leicester and employs over 11,000 colleagues. It has been listed on
the London Stock Exchange since October 2006 (DNLM.L) and has a current
market capitalisation of approximately £1.7bn.

 

 

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