REG - Dunelm Group plc - Interim Results
11/02/2025 07:15
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250211:nRSK5958Wa&default-theme=true
RNS Number : 5958W Dunelm Group plc 11 February 2025
11 February 2025
Dunelm Group plc
Interim Results for the 26 weeks ended 28 December 2024
Good performance and strategic progress in a challenging environment
Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares
retailer, today announces its interim results for the 26 weeks to 28 December
2024.
H1 FY25 H1 FY24 YoY
Total sales £893.7m £872.5m +2.4%
Digital % total sales(1) 39% 36% +3ppts
Gross margin 52.8% 52.7% +10bps
Operating costs:sales ratio 38.6% 38.1% +50bps
Profit before tax ("PBT") £123.2m £123.0m +0.2%
Diluted earnings per share 45.0p 44.6p +0.9%
Free cash flow(2) £168.5m £91.1m +£77.4m
Net cash(3) £57.1m £6.2m +£50.9m
Interim dividend per share 16.5p 16.0p +3.1%
Special dividend per share 35.0p 35.0p n/a
Highlights
· Good performance in a challenging environment, again underpinned by
the quality of our customer proposition and advantaged business model
· Sales growth of 2.4%, driven by volume, with total sales increasing
to £894m (FY24 H1: £872m)
· Another strong digital performance, with 39% of total sales generated
through digital channels (FY24 H1: 36%)
· Market share increased to 7.8%, up 30bps on a calendar year basis(4)
· Growth in active customers of 4.3% in 2024(5)
· Further progress with our strategic priorities: elevate our product
offer; connect with more customers; and harness our operational capabilities
· Continued to improve our digital proposition, whilst expanding our
store portfolio to inner London, and also Ireland via our Home Focus
acquisition
· Over 270,000 gifts donated to local communities through our
record-breaking 'Delivering Joy' campaign, more than double last year
Financial highlights
· Delivered a strong gross margin of 52.8% (FY24 H1: 52.7%), up 10bps,
whilst maintaining our value proposition
· Tight operational grip and productivity initiatives partly offsetting
inflationary impacts and investment
· Profit before tax ("PBT") up 0.2% to £123m (FY24 H1: £123m)
· Diluted earnings per share ("EPS") up 0.9% to 45.0p (FY24 H1: 44.6p)
· Free cash flow of £169m (FY24 H1: £91m), including £88m timing
benefit(2)
· Strong cash generation and confidence in future plans driving
shareholder returns:
· Interim dividend of 16.5p (FY24 H1: 16.0p); an increase of 3.1%
· Special dividend of 35.0p to return to target leverage range of 0.2×
- 0.6× net debt : annualised EBITDA(6,7)
Current trading and outlook
· We remain confident in our advantaged business model and are
progressing with our strategic plans, whilst staying mindful of a challenging
sector backdrop and a cautious consumer
· We are encouraged by early trading in the second half
· Our PBT expectations for the full year are unchanged and in line with
consensus(8)
Nick Wilkinson, Chief Executive Officer, commented:
"Our performance over the first half reflects the growing attraction of the
Dunelm offer for a wide range of customers, and the quality and resilience of
our business model. Amidst a challenging backdrop for retail, those attributes
have helped us deliver increased sales, a strong gross margin, and both
customer and market share growth.
"We have also pressed ahead with our strategy. Whether our customers prefer
maximalist prints or neutral plains, the elevation of our product is apparent
through the diverse range of styles on offer for all tastes, with quality once
again endorsed through the awarding of a Royal Warrant to our Dorma brand. Our
thriving total retail system is connecting that product with more customers,
and we saw further growth in our increasingly personalised digital channels,
as well as some exciting firsts for our store portfolio; we arrived in inner
London at Westfield, acquired 13 stores in Ireland, and we will open our 200th
store in the second half.
"As ever, whilst pleased with our results, we are eager to move faster and
with greater purpose. Customers love Dunelm, but we can grow to become a
destination for more customers, across more categories, more of the time. With
our dedicated colleagues, who have shown incredible adaptability in a
difficult trading environment, this gives us a renewed confidence in unlocking
our full potential as The Home of Homes."
1 Digital includes home delivery, Click & Collect and tablet-based sales
in store
2 Free cash flow is defined as net cash generated from operating activities
less capex (net of disposals), net interest paid (including leases) and loan
transaction costs, and repayment of principal element of lease liabilities. A
reconciliation of operating profit to free cash flow is included in the CFO
review. Free cash flow in the half included timing benefit of £88m due to a
payment in transit which cleared on the first working day of H2
3 Excluding lease liabilities. Full definition provided in the table of
alternative performance measures
(4) GlobalData UK combined homewares and furniture markets, excluding kitchen
cabinetry and bathroom furniture, for the period January 2024 to December
2024. Prior year comparative restated from 7.6% to 7.5%
(5) Year-on-year growth in unique active customers who have transacted at
least once in the 12 months to December 2024. Management estimates using
Barclays data
(6) EBITDA defined as operating profit plus depreciation and amortisation of
property, plant and equipment and intangible assets plus loss on disposal and
impairment of property, plant and equipment and intangible assets plus
depreciation on right-of-use assets
(7) Within target range at the end of H1 after interim and special dividend
commitments and excluding £88m timing benefit due to a payment in transit
which cleared on the first working day of H2
(8) Company compiled average of analysts' expectations for FY25 PBT is £209m,
with a range of £204m to £214m
Analyst presentation:
There will be an in-person presentation for analysts and institutional
investors this morning at 9.30am, hosted at Peel Hunt LLP, 100 Liverpool
Street, London, EC2M 2AT, as well as a webcast and conference call with a
facility for Q&A. For details, please contact hugo.harris@mhpgroup.com
(mailto:hugo.harris@mhpgroup.com) . A copy of the presentation will be made
available at corporate.dunelm.com
(https://protect.checkpoint.com/v2/r06/___https:/corporate.dunelm.com___.ZXV3MjpuZXh0MTU6YzpvOjJjMjgxZWUwYjI2OTg4OTVkNDQ5ZTZkMzAyYTEwODNiOjc6ODI0YzoxMzlkZWY5NTJhMmRkOWRmOGQzMzBiMDk1NGJiMTkyNGUyNTVjYjc2ZmY3NzU4MzdmOGUwMjM5ODJhZDM5MDU3OnA6RjpU)
.
Separately today, the Group has made an announcement relating to CEO
succession.
For further information please contact:
Dunelm Group plc investorrelations@dunelm.com
Nick Wilkinson, Chief Executive Officer
Karen Witts, Chief Financial Officer
Media enquiries: MHP 07770 753 544
Oliver Hughes / Rachel Farrington / Charles Hirst dunelm@mhpgroup.com
Next scheduled event:
Dunelm will release its third quarter trading update on 17 April 2025.
Quarterly analysis:
52 weeks to 28 June 2025
Q1 Q2 H1 Q3 Q4 H2 FY
Total sales £403.2m £490.5m £893.7m
Total sales growth +3.5% +1.6% +2.4%
Digital % total sales 37% 40% 39%
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 198 stores across the UK and Ireland and has developed a
successful online offer through dunelm.com which includes home delivery and
Click & Collect options. 155 UK 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.12,000 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(9).
(9) Ordinary dividends plus special distributions
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
We had a good first half in what has remained a challenging environment for
the sector. Our performance was underpinned by the strength of our advantaged
business model and the quality of our offer, delivering volume-driven sales
growth, strong gross margins and continued progression in both customer
numbers(10) and market share.(11)
We are mindful of what has been a prolonged period of weak consumer confidence
and cost inflation, and as always recognise the importance of being
level-headed and disciplined. We also know from Dunelm's history that in times
like this, by maintaining our customer focus and investing wisely, we can
build a bigger and better business, to the benefit of all our stakeholders.
To achieve these ambitions, we are maintaining a laser focus on the customer.
In a world of evolving consumer habits and an increasingly diverse range of
shopping missions for the home, understanding our customers, through data and
insight, allows us to develop and improve our specialist proposition. We
continue to develop that proposition through our three strategic focus areas,
on which I provide further detail below.
As well as responding to the consumer environment, we will continue to adapt
to this period of sustained wage inflation. We have a good track record of
managing cost pressures in recent years, with a clear focus on operational
grip helping us to maintain stable margins. We will continue to focus on cost
mitigation through tactical and operational improvements, alongside targeted
investment in longer-term productivity opportunities. At the same time, our
growth ambitions, and the capabilities we have built to drive them, will
deliver further benefits through operational leverage. Through our unique
business model, we will continue to prioritise our value proposition whilst
carefully managing our 'good, better, best' range architecture. Overall, this
gives us confidence in maintaining broadly stable margins going forward.
As ever, our performance would not have been possible without our dedicated
colleagues. I would like to thank them all for their adaptability and
commitment, and the amazing work they have been doing in their communities, as
demonstrated by this year's record-breaking Delivering Joy campaign.
(10) Year-on-year growth in unique active customers who have transacted at
least once in the 12 months to December 2024. Management estimates using
Barclays data
(11) GlobalData UK combined homewares and furniture markets, excluding kitchen
cabinetry and bathroom furniture, for the period January 2024 to December
2024. Prior year comparative restated from 7.6% to 7.5%
H1 Review
Sales increased by 2.4% in the first half, in a soft homewares and furniture
market which has continued to see volatility in weekly trading patterns. As in
recent periods, volume has continued to be the driver of our sales growth,
with prices held broadly stable in the period. Our sales growth was again
delivered alongside a strong gross margin, which was up 10bps year-on-year as
we continued to exercise discipline in our pricing and promotional activity,
whilst carefully managing our input costs.
Our operating costs:sales ratio was 38.6% (FY24 H1: 38.1%). Despite
inflationary headwinds in our cost base, we have continued to invest in the
business, in both growth and productivity drivers. This incremental investment
in the first half was more than offset by operational productivity savings.
Overall, profit before tax was up 0.2% to £123.2m, reflecting a strong PBT
margin for the first half of 13.8% (FY24 H1: 14.1%). With a normalised
effective tax rate following a one-off deferred tax adjustment last year,
diluted earnings per share was up 0.9% to 45.0p (FY24 H1: 44.6p).
Our strong cash generation continued in the first half, which, alongside
ongoing confidence in our future plans, has resulted in the Board declaring an
interim dividend of 16.5p per share (FY24 H1: 16.0p) and a special dividend of
35.0p per share.
Unlocking our full potential as The Home of Homes
Our growth opportunity can be viewed through the lens of multiple product
category runways. The homewares and furniture markets comprise dozens of
product categories, and in each we have significant headroom in terms of
awareness, consideration and overall market share. The weighting of the
opportunity, and therefore the levers we pull, differ by category. We are
increasingly becoming a multi-category specialist: The Home of Homes.
Our approach to this growth opportunity is framed by our three strategic
priorities: elevate our largely own brand, exclusive product; develop our
channels to offer better shopping experiences which connect with more
customers; and harness our operational capabilities to drive both growth and
productivity. With these interconnected focus areas delivering significant
compounding benefits, our sights are firmly set on achieving our medium-term
milestone of 10% market share.
Elevate our product offer
Elevating our product means creating products and collections that delight and
surprise our customers, alongside a relentless focus on offering them value.
We do this through our 'good, better, best' product hierarchy which we have
adopted across all categories and which provides a framework to manage our
ranges, raising the bar on quality and choices whilst maintaining appropriate
price points at all levels.
As an example, in our towels collection we are continuing to extend the range
at both the 'good' and 'best' ends of our hierarchy, with nine value tiers of
bath towels from the £4 'good tier' to the new £24 'best tier' to soon be
launched. In the middle of this assortment is our best-selling Egyptian cotton
towel, where we recently upgraded the quality with better finishing and a
greater choice of longer lasting colours to offer better value. This
demonstrates the way in which we elevate a core category, making multiple
detailed range improvements to offer quality, choice and value to our
customers.
We are also elevating through design, which is built over time with deep
capabilities and expertise. In our core textile categories, that expertise is
the combination of our long-term committed suppliers and our in-house design
team. Dorma is an example of this, recently recognised for its quality by
receiving a Royal Warrant from the King. More recently, in furniture we have
built design skills in-house alongside a growing network of UK and Asia
manufacturing partners and have seen strong sales growth across our
collections. Our 'Beatrice' furniture range has been particularly successful,
where we have been bolder in our design choices and have now extended this
collection into our other sub-categories in various colourways.
We also seek out collaborations, which both inspire customers and give our
products further reach, particularly for newer customers who may not have
previously considered Dunelm. Our latest is with Sophie Robinson, where we
have developed a unique maximalist collection which has just launched for the
upcoming season. This year we are extending and elevating some of our
long-term collaborations, notably with the Natural History Museum. We are also
extending designs from the William Morris archive into finished products, in
addition to Made-to-Measure blinds and curtains.
Connect with more customers
We are improving both the reach and customer experience of our channels,
optimising each one as a part of our total retail system. Across our digital
channels, we benefit from the insights we gain from millions of visits, all of
which give greater direct visibility of customer behaviour, allowing for
faster experimentation and adaptation. Our stores remain an integral part of
the total retail system, driving awareness and engagement in their local
communities, whilst playing a key role in supporting the growth in Click &
Collect sales in the first half.
In digital, we have multiple examples of where we have tailored our offer for
customers. In isolation these may feel small, but the aggregate impact is
significant. We have recently improved the search functionality on dunelm.com
through the introduction of new AI-powered tooling, and we are now expanding
this capability to power more personalised customer recommendations. Social
proofing is also driving conversion on the site, by helping customers to see
others positively engaging with our products. We plan to expand this
functionality to new use cases, with some encouraging early signs. Our digital
proposition will continue to be enhanced through rigorous programmes of
experimentation to accurately test incrementality, in each case ensuring that
there is meaningful customer value relative to the cost to the business.
Later this year we will also be launching our first customer mobile app.
Initially this will offer a transactional shopping experience, from which we
will learn and develop further functionality and personalisation.
The optimisation of our channels extends to stores. In the first half we
opened our first inner London store in Westfield London. As well as the store
itself, the broader opportunity is to build awareness for consumers who may
not have come across Dunelm before, and to drive consideration for those who
may know of Dunelm, but do not currently shop with us. This means
merchandising the store differently to a typical Dunelm superstore, surprising
customers, demonstrating the quality and value of individual products, and
showcasing the ease of coordinating across categories to create a stylish
interior. We are pleased with early trading. As well as welcoming a good
proportion of new customers, we are seeing strong take up of our digital offer
to order for home delivery, and for Click & Collect.
We are rolling out more superstores, across both smaller and larger formats.
We anticipate opening five stores in the second half of the year; in
catchments we have targeted since we began rolling out superstores, in some
smaller catchments we have not previously targeted, and also to infill densely
populated areas where we are underrepresented.
In November we took our first step into an international market with the
acquisition of Home Focus in Ireland. This gave us a portfolio of 13 small
stores focused on soft textiles in high-quality locations, with a small online
operation and a 'reserve in store' offer. We are pleased with the early
trading of the business, and have already started selling key Dunelm lines in
stores.
This acquisition is small, but gives us a good opportunity to raise the bar on
the customer offer, including in time setting up our own digital platform to
serve customers in Ireland. As ever, we will approach this with a view to
building profitable and sustainable growth for the long term. Looking further
ahead, this also gives us the opportunity to build the capability to connect
our product to customers in other countries.
Harness our operational capabilities
Our operational capabilities are, first and foremost, enablers for developing
a great customer proposition and driving growth. Leveraging this growth
alongside our capabilities creates opportunities to yield benefits greater
than simply doing what we do today more efficiently.
Click & Collect is a good example of where we can make propositional
changes to benefit the customer, with the opportunity to improve efficiency as
we grow. For our customers, we have significantly increased the number of
lines available for customer collection in local stores - products accounting
for around three quarters of our digital sales are now available for
collection. Click & Collect sales grew significantly the first half and as
we grow, we are learning how to become more productive, with the opportunity
now to improve how and when the stock reaches our stores, and how our stores
operationally manage these higher volumes.
Another example of where we have already leveraged our scale is in our digital
channels, where we have increased the efficiency of performance marketing. Our
growth, as well as the skills we have built in customer data, experimentation
and analytics, has enabled us to optimise spend across more of the customer
journey by targeting consideration earlier through paid social advertising.
The continuous improvement we are making to dunelm.com also improves
conversion, and thus our paid advertising efficiency.
As well as tactical efficiency improvements, we are targeting programmatic
investments for longer term productivity. One example already underway is the
roll out of self-serve checkouts for our customers, which are now being
implemented in some of our larger stores following a successful trial. We
expect these checkouts to be in over 100 stores by the end of next financial
year, remodelling the store space at the same time. With the technology well
developed, and labour costs rising, this programme will pay back in less than
three years and delivers a solution we know appeals to many customers.
Summary and outlook
We remain confident in our advantaged business model and are progressing with
our strategic plans. We are pleased with the quality of our sales growth in
the first half, underpinned by higher volumes, more customers and market share
gains, alongside further gross margin expansion. Overall, we have had a good
first half, with profits broadly flat year-on-year in a challenging
environment.
Ongoing consumer caution and sustained labour cost headwinds are continuing to
impact all businesses in our sector. It is important that we face these
challenges with a long-term perspective, adapting in ways that keep the
customer front and centre, whilst delivering sustainable growth.
We are encouraged by early trading in the second half. Our expectations for
full-year PBT are therefore unchanged and in line with consensus(12).
(12) Company compiled average of analysts' expectations for FY25 PBT is
£209m, with a range of £204m to £214m
Nick Wilkinson
Chief Executive Officer
11 February 2025
CHIEF FINANCIAL OFFICER'S REVIEW
Revenue
H1 FY25 YoY
Total Group sales £893.7m +2.4%
Digital % total sales 39% +3ppts
Combined market share(13) 7.8% +30bps
Active customer growth(14) N/A +4.3%
Total sales for the first half of £894m (FY24 H1: £872m) were 2.4% higher
than FY24; a good performance delivered against a market backdrop that
continues to be volatile amidst ongoing consumer caution. Growth in the first
half continued to be driven by volume, with prices broadly stable.
The proportion of revenue from digital sales increased by 3ppts to 39%.
Customers responded well to the ongoing improvements to our digital
proposition, as we maintained our focus on making shopping online easier.
Notably, we improved the search functionality on dunelm.com, resulting in a
greater level of personalisation in search results, and a much lower level of
searches returning no results. Click & Collect performed strongly in the
first half, as we extended the breadth of products now available through this
channel, and made more items available for collection within two hours
(previously three hours) to improve the overall customer convenience of our
multi-channel offer.
The breadth and relevance of our offer continues to be a key part of our
customer proposition. We saw our furniture categories perform particularly
well in the first half as we extended our most popular designs across a wider
range of products. We also saw the benefits of our developments in
Made-to-Measure window treatments, where our improving capabilities and
investment in vertical integration has driven strong growth.
We are pleased with the quality of our sales growth, delivered in a furniture
and homewares market that has remained soft. Our market share increased by
30bps(13) year-on-year, and is now at 7.8%. We also continued to extend our
customer reach and saw growth in our active customer base of +4.3%(14).
Encouragingly, we once again saw strong growth across our customer cohorts,
with increasing customer numbers in all age groups, all geographical regions
and all income groups up to £100k.
(13) GlobalData UK combined homewares and furniture markets, excluding kitchen
cabinetry and bathroom furniture, for the period January 2024 to December
2024. Prior year comparative restated from 7.6% to 7.5%
(14) Year-on-year growth in unique active customers who have transacted at
least once in the 12 months to December 2024. Management estimates using
Barclays data
Gross margin
Our unrelenting focus on operational grip has again delivered a strong gross
margin. For the first half, gross margin was 52.8% (FY24 H1: 52.7%), an
improvement of 10bps. We have effectively managed input costs, whilst
maintaining promotional discipline and prioritising our value proposition for
our customers, across all value tiers.
For the full year, we now expect gross margin to be between 51.5% and 52.0%,
the upper half of our previously guided range. We have good visibility of the
main components of our cost of goods in the second half, and a strong plan for
maintaining value for our customers.
Operating costs and income
Total operating costs were £345m (FY24 H1: £333m). Our operating costs:sales
ratio was 38.6% (FY24 H1: 38.1%) in the first half, which excludes operating
income of £2m (FY24 H1: nil). The increase in operating costs:sales ratio was
largely driven by inflation, mainly from higher labour costs. We have
continued to invest in the business, though the incremental investment in the
first half was more than offset by operational productivity savings.
Our sales growth in the first half continued to be driven by volume.
Associated variable costs, predominantly in our distribution network and
performance marketing, were up £7m in the period. Inflation added a further
£9m of cost year-on-year, largely driven by labour costs linked to higher
National Living Wage rates.
We remain committed to investing in tools and capabilities to support our
long-term growth. We invested an incremental £8m in the first half, the
increase including manufacturing and capabilities in Made-to-Measure and
investment in stores.
Our investments in the first half were more than offset by productivity gains
of £11m. These included tactical initiatives delivered across the business,
with particular savings from optimising store scheduling. We also saw the
results of previous investments in digital capability through performance
marketing, a key area of spend where we have increased efficiency at the same
time as driving sales growth.
Profit before tax
Net finance costs of £5m (FY24 H1: £4m) were £1m higher year-on-year,
reflecting higher underlying net debt. Finance costs included interest on IFRS
16 lease liabilities of £4m (FY24 H1: £3m).
Profit before tax in the period was £123m (FY24 H1: £123m), up 0.2%
year-on-year and reflecting a broadly stable PBT margin of 13.8% (FY24 H1:
14.1%). Our FY25 PBT expectations are unchanged and in line with
consensus(15).
( )
Looking ahead, we are mindful of the further increases to labour costs
following the Autumn Budget announcement. In particular, the overall impact of
increases to employer National Insurance Contributions from April 2025 was not
anticipated. We have a good track record of delivering efficiencies to offset
cost increases, and will continue to do so through both operational
improvements and targeted longer-term productivity opportunities. We will
drive benefits through the ongoing leverage of our scale and capabilities, and
will carefully manage the architecture and pricing of our ranges whilst
maintaining our overall value proposition. We are confident these levers give
us the ability to deliver broadly stable PBT margins going forward.
(15) Company compiled average of analysts' expectations for FY25 PBT is
£209m, with a range of £204m to £214m
Earnings
Profit after tax of £92m (FY24 H1: £91m) reflects an effective tax rate of
25.6% (FY24 H1: 26.3%). This is a normalisation of the effective tax rate, in
line with our historic range of 50-100bps above the headline rate, as the
prior year included the impact of a one-off deferred tax adjustment. The
difference between the effective tax rate and the headline rate reflected the
disallowable expenditure related to property purchases and intangible asset
additions. The impact of the Irish tax rate on the Group is immaterial. The
effective tax rate for the full year is expected to be broadly in line with
the first half.
Basic earnings per share (EPS) for the period was 45.2 pence (FY24 H1: 44.9
pence). Diluted earnings per share was 45.0 pence (FY24 H1: 44.6 pence),
growing 0.9% year-on-year due to the reduction in the effective tax rate.
Cash generation and net debt
H1 FY25 H1 FY24
Operating profit £128.6m £126.9m
Depreciation and amortisation(16) £40.9m £40.4m
Net movement in working capital £93.6m (£3.0m)
Share-based payments £1.5m £2.6m
Tax paid (£25.5m) (£24.7m)
Net cash generated from operating activities £239.1m £142.2m
Capex & business combination (£39.0m) (£19.8m)
Net interest and loan transaction costs(17) (£1.7m) (£2.6m)
Interest paid on lease liabilities (£3.5m) (£3.0m)
Repayment of principal element of lease liabilities (£26.4m) (£25.7m)
Free cash flow £168.5m £91.1m
Net cash(18) £57.1m £6.2m
(16) Including impairment and loss on disposal
(17) Excluding interest on lease liabilities
(18) Excluding lease liabilities
The Group continues to generate strong cash flows, with free cash flow of
£169m in the first half (FY24 H1: £91m). This includes a timing benefit of
£88m, due to a payment in transit which cleared on the first working day of
the second half, the impact of which on our reported numbers is shown below:
Reported Underlying
Net movement in working capital (£m) £93.6m £5.5m
Free cash flow (£m) £168.5m £80.4m
Free cash flow to operating profit (%) 131.0% 62.5%
Net cash / (debt) (£m) £57.1m (£31.0m)
Net cash / (debt) : annualised EBITDA (x) 0.2x (0.1)x
We saw a £6m underlying cash inflow from net working capital in the first
half, and expect a small inflow for the full year. Inventory was £229m at the
half year (FY24 H1: 232m), having been well controlled throughout the year so
far, reflecting roll out of our forecasting and replenishment system.
Total capital investment for the first half was £39m (FY24 H1: £20m), with
the year-on-year increase due to a £22m freehold retail property acquisition,
as previously guided. Other capital spend in the half included £11m on our
existing store estate including six refits, and the acquisition cost of Home
Focus.
We continue to expect the majority of our new store openings to be leasehold,
however we have the capacity to take advantage of freehold opportunities where
the returns are attractive, including in locations where we are currently
underrepresented. In Greater London, one such location, we are currently in
legals for a further freehold property acquisition, which if successful, would
open as a Dunelm superstore in FY26. If this transaction completes, capex for
the full year will be ahead of our initial guidance, at £60m - £70m.
After adjusting for the impact of timing in working capital, the underlying
conversion of operating profit to free cash flow was good at 63% (FY25 H1:
72%). The variance year-on-year was primarily driven by the increase in
capital investment.
Cash tax paid was £26m (FY24 H1: £25m), broadly in line year-on-year.
Total dividend payments in the period were £56m (FY24 H1: £55m). The Group
ended the first half with net cash of £57m(19) including the benefit of
timing noted above (FY24 H1: £6m). After adjusting for the impact of working
capital timing, net debt was £31m. ( )
(19) Excluding lease liabilities. Full definition provided in the table of
alternative performance measures
Banking agreements
At 28 December 2024, the Group had in place a £250m unsecured revolving
credit facility ("RCF"), which was undrawn at the half year end. The terms of
the RCF included covenants in respect of leverage (net debt(20) to be no
greater than 2.5× adjusted EBITDA(21)) and fixed charge cover (EBITDAR(22) to
be no less than 1.75× fixed charges(23)), both of which were met comfortably
as at 28 December 2024. The maturity date is September 2028 and there is an
option to extend by another year at Dunelm's request, subject to lender
consent. The Group also maintains £10m of uncommitted overdraft facilities.
(20) Excluding lease liabilities. Full definition provided in the table of
alternative performance measures
(21) Adjusted EBITDA defined as EBITDA less depreciation on right-of-use
assets
(22) EBITDAR defined as EBITDA plus rent
(23) Fixed charges are defined as net interest costs plus right-of-use asset
depreciation plus rent
Capital and dividend policies
The Board policy on capital structure targets an average net debt level
(excluding lease obligations and short-term fluctuations in working capital)
of between 0.2× and 0.6× the last 12 months' EBITDA(24). The Group's
dividend policy targets ordinary dividend cover(25) of between 1.75× and
2.25× earnings per share during the financial year to which the dividend
relates.
The Board will continue to consider returning surplus cash to shareholders if
average net debt, excluding lease liabilities, over a period, consistently
falls below the minimum target of 0.2× EBITDA(24), subject to known and
anticipated investment and expenditure plans at the time.
The Group makes share repurchases from time to time to hold in treasury to
satisfy obligations under employee share schemes. The Group held 0.9m shares
in treasury as at 28 December 2024 (FY24 H1: 1.3m).
The Group's full capital and dividend policies are available on our website at
corporate.dunelm.com
(https://protect.checkpoint.com/v2/r06/___http:/www.corporate.dunelm.com___.ZXV3MjpuZXh0MTU6YzpvOjJjMjgxZWUwYjI2OTg4OTVkNDQ5ZTZkMzAyYTEwODNiOjc6ZTZiNTo1ZmYxZjFmMDNlN2MwN2MzMjI5ZDBmZDVjZDIxZDY4N2ZmNzk3NmQyZWIxN2U2YTIwZmRmOWVlMmIwMWZkOGMzOnA6RjpU)
.
(24) EBITDA defined as operating profit plus depreciation and amortisation of
property, plant and equipment and intangible assets plus loss on disposal and
impairment of property, plant and equipment and intangible assets plus
depreciation on right-of-use assets
(25) Dividend cover is calculated as earnings per share divided by the total
ordinary dividend relating to the financial year
Dividends
Recognising our performance and ongoing confidence in the business, the Board
has declared an interim ordinary dividend of 16.5 pence per share, an increase
of 3.1% compared to FY24 (FY24 H1: 16.0p). The interim dividend will be paid
on 8 April 2025. The ex-dividend date is 13 March 2025 and the record date is
14 March 2025.
In addition to this, the strong cash generation in the period has enabled the
Board to declare a special dividend of 35.0 pence per share. The special
dividend will also be paid on 8 April 2025. The ex-dividend date is 13 March
2025 and the record date is 14 March 2025. Whilst the period ended in a net
cash position, excluding the working capital timing benefit of £88m, net debt
of £31m represented 0.1x annualised EBITDA. After the committed dividend
payments, the Group is within its target leverage range.
Principal risks and uncertainties
The Board regularly reviews and monitors the risks and uncertainties which
could have a material effect on the Group's results. The principal risks and
uncertainties that could lead to a material impact have not changed from those
listed in the FY24 Annual Report.
A summary of the principal risks has been provided below:
Risk Impact
Customer offer Ongoing external uncertainty and inflationary pressure on consumers has led to
significant change in consumer behaviour. Failure to respond to changing
consumer needs and to maintain a competitive offer (value & choice,
friendly & expert, fast & convenient and good & circular) will
undermine our ambition to increase market share and drive profitable and
sustainable growth.
Product reputation and trust Our stakeholders expect us to deliver products that are safe, compliant with
legal and regulatory requirements, and fit for purpose. Our customers are
increasingly aware of the environmental and social impact of their purchases
and want to know that our products have been responsibly sourced and that
their environmental impact is minimised.
Failure by our suppliers to uphold our approach to business ethics, human
rights (including safety and modern slavery) and the environment may undermine
or damage our reputation as a responsible retailer, and result in a loss of
confidence in Dunelm.
People and culture Our business could be adversely impacted if we fail to attract, retain, and
develop colleagues with the appropriate skills, capabilities and diverse
background.
Failing to embed and live our values could impact business performance, the
delivery of our purpose and the long-term sustainability of our business.
IT systems, data and cyber security Our IT systems and infrastructure are critical to managing our operations,
interacting with customers, and trading successfully.
A key system being unavailable or suffering a security breach could lead to
operational difficulties, loss of sales and productivity, legal and regulatory
penalties due to loss of personal data, reputational damage, and loss of
stakeholder trust.
Business change Dunelm recognises that there is significant opportunity in digitalising the
business and has invested and will continue to invest in system improvements
to drive growth and efficiency.
Failing to successfully introduce, deliver and leverage new technology and
systems, along with the associated process and organisational changes across
the business to further improve our proposition and operations could result in
reduced operational efficiency, competitiveness, relevance and growth.
Furthermore, failure to deliver the expected objectives on time and on budget,
could impact the delivery of the planned business benefits.
Regulatory and compliance We operate in an increasingly regulated environment and must comply with a
wide range of laws, regulations, and standards.
Failure to comply with or to take appropriate steps to prevent a breach of
these requirements could result in formal investigations, legal and financial
penalties, reputational damage and loss of business.
Supply chain resilience We are dependent on complex global supply chains and fulfilment solutions to
deliver products to our customers. Instability in the global supply chain or
failure of a key supplier may impact our ability to effectively manage stock
and satisfy customer demand.
Finance and treasury Progress against business objectives may be constrained by a lack of
short-term funding or access to long-term capital.
Climate change and environment Failure to positively change our impact on the environment would fall short of
the expectations of our customers, colleagues, shareholders, and other
stakeholders which could lead to reputational damage and financial loss.
In addition, an inability to anticipate and mitigate against climate change
and other environmental risks could cause disruption in the availability and
quality of raw materials such as cotton and timber, affecting production
capacity, product quality, and overall supply chain resilience. This, and
potential transition risks related to environmental taxation, could result in
higher costs, delays, and potential loss of customers.
Alternative performance measures (APMs)
APM Definition, purpose and reconciliation to statutory measure
Total sales Equivalent to revenue (from all channels). This is net of customer returns.
Digital sales Digital sales include home delivery, Click & Collect and tablet-based
sales in store.
Digital % total sales Digital sales (as defined above) expressed as a percentage of revenue. This is
not a measure that we seek to maximise in itself, but we measure it to track
our adaptability to changing customer behaviours.
Ordinary dividend cover Ordinary dividend cover is calculated as earnings per share divided by the
total ordinary dividend relating to the financial year. This measure is used
in our capital and dividend policy.
Gross margin % Gross profit expressed as a percentage of revenue. Measures the profitability
of product sales prior to operating costs.
Operating costs to sales ratio Operating costs expressed as a percentage of revenue. To measure the growth of
costs relative to sales growth.
EBITDA Earnings before interest, tax, depreciation, amortisation and impairment.
Operating profit plus depreciation and amortisation of property, plant and
equipment, right-of-use assets and intangible assets plus loss on disposal and
impairment of property, plant and equipment and intangible assets. Used in our
capital and dividend policy.
Adjusted EBITDA EBITDA less depreciation on right-of-use assets. To measure compliance with
bank covenants.
EBITDAR EBITDAR is calculated as EBITDA plus rent. To measure compliance with bank
covenants.
Effective tax rate Taxation expressed as a percentage of profit before taxation. To measure how
close we are to the UK corporation tax rate and understand the reasons for any
differences.
Capex (net of disposals) Acquisition of intangible assets, property, plant and equipment and investment
properties, less proceeds on disposal of intangible assets, property, plant
and equipment and investment properties.
Free cash flow Free cash flow is defined as net cash generated from operating activities less
capex (net of disposals), net interest paid (including leases) and loan
transaction costs, and repayment of principal element of lease liabilities.
Measures the cash generated that is available for disbursement to
shareholders.
Net cash / (debt) Cash and cash equivalents less total borrowings (as shown in note 16).
Excludes IFRS 16 lease liabilities.
Cash conversion Free cash flow expressed as a percentage of operating profit.
Karen Witts
Chief Financial Officer
11 February 2025
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that these condensed interim financial statements have
been prepared in accordance with UK adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related-party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
The maintenance and integrity of the Dunelm Group Plc website is the
responsibility of the directors; the work carried out by the authors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that might have occurred to the interim
financial statements since they were initially presented on the website.
The directors of Dunelm Group Plc are listed in the Company's annual report
for 29 June 2024. A list of current directors is maintained on the Company's
website: www.corporate.dunelm.com.
By order of the board
Nick Wilkinson
Karen Witts
Chief Executive
Officer
Chief Financial Officer
11 February 2025
11 February 2025
INDEPENDENT REVIEW REPORT TO DUNELM GROUP PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Dunelm Group Plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Interim Results of
Dunelm Group Plc for the 26 week period ended 28 December 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the consolidated statement of financial position as at
28 December 2024;
· the consolidated income statement and consolidated statement of
comprehensive income for the period then ended;
· the consolidated statement of cash flows for the period then ended;
· the consolidated statement of changes in equity for the period then
ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Results of Dunelm
Group plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Interim Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Interim Results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
East Midlands
11 February 2025
CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
For the 26 weeks ended 28 December 2024
26 weeks ended 26 weeks ended 52 weeks ended
28 December 2024
30 December 2023
29 June
2024
Note £'m £'m £'m
Revenue 5 893.7 872.5 1,706.5
Cost of sales (421.8) (413.0) (823.2)
Gross profit 471.9 459.5 883.3
Other operating income 1.6 - -
Operating costs (344.9) (332.6) (670.0)
Operating profit 128.6 126.9 213.3
Financial income 0.6 1.2 2.0
Financial expenses (6.0) (5.1) (9.9)
Profit before taxation 123.2 123.0 205.4
Taxation 6 (31.6) (32.3) (54.2)
Profit for the period 91.6 90.7 151.2
Earnings per Ordinary Share - basic 8 45.2p 44.9p 74.7p
Earnings per Ordinary Share - diluted 8 45.0p 44.6p 74.4p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
For the 26 weeks ended 28 December 2024
26 weeks ended 26 weeks ended 52 weeks
28 December 2024
30 December 2023
ended
29 June
2024
£'m £'m £'m
Profit for the period 91.6 90.7 151.2
Other comprehensive (expense)/income:
Items that may be subsequently reclassified to profit or loss:
Movement in fair value of cash flow hedges 0.6 (1.2) 0.2
Deferred tax on hedging movements (1.6) 0.3 (1.0)
Other comprehensive (expense)/income for the period, net of tax (1.0) (0.9) (0.8)
Total comprehensive income for the period 90.6 89.8 150.4
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
As at 28 December 2024 28 December 2024 30 December 2023 29 June
2024
Note £'m £'m £'m
Non-current assets
Intangible assets 9 5.2 4.7 3.8
Property, plant and equipment 9 171.8 174.9 173.0
Right-of-use assets 11 218.8 222.7 222.9
Investment Property 10 29.6 - 7.5
Deferred tax assets 3.4 5.5 1.8
Derivative financial instruments 1.2 - 0.1
Total non-current assets 430.0 407.8 409.1
Current assets
Inventories 12 228.5 231.5 223.0
Trade and other receivables 13 37.0 25.2 26.2
Derivative financial instruments 1.7 0.4 0.3
Cash and cash equivalents 57.1 56.2 23.4
Total current assets 324.3 313.3 272.9
Total assets 754.3 721.1 682.0
Current liabilities
Trade and other payables 14 (311.9) (226.6) (205.0)
Lease liabilities 11 (52.2) (52.7) (52.1)
Current tax liability (7.6) (6.5) (1.5)
Derivative financial instruments (1.2) (8.6) (4.9)
Total current liabilities (372.9) (294.4) (263.5)
Non-current liabilities
Bank loans 16 - (47.7) (77.0)
Lease liabilities 11 (192.2) (196.2) (197.5)
Provisions (5.5) (5.5) (5.5)
Derivative financial instruments - (2.3) (0.6)
Total non-current liabilities (197.7) (251.7) (280.6)
Total liabilities (570.6) (546.1) (544.1)
Net assets 183.7 175.0 137.9
Equity
Issued share capital 2.0 2.0 2.0
Share premium account 1.7 1.7 1.7
Capital redemption reserve 43.2 43.2 43.2
Hedging reserve 1.3 (7.9) (3.8)
Retained earnings 135.5 136.0 94.8
Total equity 183.7 175.0 137.9
Karen Witts
Chief Financial Officer
11 February 2025
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the 26 weeks ended 28 December 2024
26 weeks ended 26 weeks ended 52 weeks ended
28 December 2024
30 December 2023
29 June
2024
Note £'m £'m £'m
Cash flows from operating activities
Profit before taxation 123.2 123.0 205.4
Net financial expense 5.4 3.9 7.9
Operating profit 128.6 126.9 213.3
Depreciation and amortisation of property, plant and equipment and intangible 9 15.8 15.1 30.4
assets
Depreciation on right-of-use assets 11 24.9 25.2 50.2
Loss on disposal and impairment of property, plant and equipment and 9 0.2 0.1 0.5
intangible assets
Loss on disposal and impairment of right-of-use assets 11 - - 0.9
Share-based payments expense 1.5 2.6 4.3
Operating cash flow before movements in working capital 171.0 169.9 299.6
Increase in inventories 12 (3.5) (20.5) (12.0)
Increase in receivables 13 (8.3) (0.9) (1.9)
Increase/(decrease) in payables 14 105.4 18.4 (3.8)
Net movement in working capital 93.6 (3.0) (17.7)
Tax paid (25.5) (24.7) (49.6)
Net cash generated from operating activities 239.1 142.2 232.3
Cash flows from investing activities
Acquisition of intangible assets 9 (3.0) (1.5) (2.6)
Acquisition of property, plant and equipment 9 (13.2) (18.3) (29.8)
Acquisition of Investment Property 10 (22.3) - (7.5)
Acquisition of subsidiary, net of cash acquired (0.5) - -
Interest received 0.6 0.7 1.6
Net cash used in investing activities (38.4) (19.1) (38.3)
Cash flows from financing activities
Proceeds from issue of treasury shares and Ordinary Shares 0.1 0.1 0.1
Purchase of treasury shares - - -
Drawdowns on Revolving Credit Facility 36.0 79.0 110.0
Repayments of Revolving Credit Facility (115.0) (106.0) (108.0)
Interest paid and loan transaction costs (2.3) (3.3) (4.9)
Interest paid on lease liabilities 11 (3.5) (3.0) (6.1)
Repayment of principal element of lease liabilities (26.4) (25.7) (50.8)
Ordinary dividends paid 7 (55.7) (54.5) (157.6)
Net cash flows used in financing activities (166.8) (113.4) (217.3)
Net increase in cash and cash equivalents 33.9 9.7 (23.3)
Foreign exchange revaluations (0.2) 0.2 0.4
Cash and cash equivalents at the beginning of the period 23.4 46.3 46.3
Cash and cash equivalents at the end of the period 57.1 56.2 23.4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
For the 26 weeks ended 28 December 2024
Note Issued share capital Share premium account Capital redemption reserve Hedging reserve Retained earnings Total equity attributable to equity holders of the Parent
£'m £'m £'m £'m £'m £'m
As at 29 June 2024 2.0 1.7 43.2 (3.8) 94.8 137.9
Profit for the period - - - - 91.6 91.6
Movement in fair value of cash flow hedges - - - 0.6 - 0.6
Deferred tax on hedging movements - - - (1.6) - (1.6)
Total comprehensive income for the period - - - (1.0) 91.6 90.6
Proceeds from issue of treasury shares - - - - 0.1 0.1
Share-based payments - - - - 1.5 1.5
Deferred tax on share-based payments - - - - 3.0 3.0
Current tax on share options exercised - - - - 0.2 0.2
Movement on cash flow hedges - - - 6.1 - 6.1
transferred to inventory
Ordinary dividends paid 7 - - - - (55.7) (55.7)
Total transactions with owners, - - - 6.1 (50.9) (44.8)
recorded directly in equity
As at 28 December 2024 2.0 1.7 43.2 1.3 135.5 183.7
As at 1 July 2023 2.0 1.7 43.2 (6.9) 97.5 137.5
Profit for the period - - - - 90.7 90.7
Movement in fair value of cash flow hedges - - - (1.2) - (1.2)
Deferred tax on hedging movements - - - 0.3 - 0.3
Total comprehensive - - - (0.9) 90.7 89.8
income for the period
Proceeds from issue of treasury shares - - - - 0.1 0.1
Share-based payments - - - - 2.6 2.6
Deferred tax on share-based payments - - - - (0.6) (0.6)
Current tax on share options exercised - - - - 0.2 0.2
Movement on cash flow hedges - - - (0.1) - (0.1)
transferred to inventory
Ordinary dividends paid 7 - - - - (54.5) (54.5)
Total transactions with owners, - - - (0.1) (52.2) (52.3)
recorded directly in equity
As at 30 December 2023 2.0 1.7 43.2 (7.9) 136.0 175.0
NOTES TO THE INTERIM FINANCIAL STATEMENTS
For the 26 weeks ended 28 December 2024 (UNAUDITED)
1 General information
Dunelm Group plc and its subsidiaries ('the Group') are incorporated and
domiciled in the UK. Dunelm Group plc is a listed public company, limited by
shares and the company registration number is 04708277. The registered office
is Dunelm Store Support Centre, Watermead Business Park, Syston, Leicester,
Leicestershire, England, LE7 1AD.
The primary business activity of the Group is the sale of homewares in the UK,
in stores and online.
The Group's financial results and cash flows are subject to seasonal trends
between the first and second half of the financial period. Traditionally,
revenue and profit are higher in the first half of the financial period due to
the performance of seasonal lines and the timing of sale events.
These condensed interim financial statements do not comprise statutory
accounts as per the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 29 June 2024 were approved by the Board
of Directors on 11 September 2024 and delivered to the Registrar of Companies.
The independent auditors' report on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act.
2 Basis of preparation
This condensed consolidated interim financial report for the half-year
reporting period ended 28 December 2024 has been prepared in accordance with
the UK-adopted International Accounting Standard 34 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim report does not include all of the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the annual report for the year ended 29 June 2024, which
has been prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as applicable to
companies reporting under those standards and any public announcements made by
Dunelm Group Plc during the interim reporting period.
3 Going concern basis
The interim financial statements have been prepared on a going concern basis.
In adopting the going concern basis, the Board of Directors have considered
the current financial position of the Group, its strategy, the market outlook,
and its principal risks. The Directors have also considered the Group's
current cash position and its available facilities, including the Group's
Revolving Credit Facility ('RCF') committed until 6 September 2028, which may
be extended by a further one year at Dunelm's request, subject to lender
consent. Furthermore, cash flow forecasts have demonstrated that covenants
will continue to be comfortably met even in downside scenarios such as a
general economic downturn resulting in consumers switching away from spending
on homewares. Following this review, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future and they continue to adopt the going
concern basis of accounting in preparing these interim financial statements.
4 Accounting policies
The condensed financial statements have been prepared under the historical
cost convention, except for derivative financial instruments and share-based
payments which are stated at their fair value.
The accounting policies adopted, as well as significant and key estimates and
critical judgements applied, are consistent with those in the annual financial
statements for the period ended 29 June 2024, as described in those financial
statements, except as described below:
· Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profit or loss.
5 Revenue
The Group has one reportable segment, in accordance with IFRS 8 - Operating
Segments, which is the retail of homewares in the UK and Ireland.
Customers access the Group's offer across multiple channels and often their
journey involves more than one channel. Therefore, internal reporting focuses
on the Group as a whole and does not identify individual segments.
6 Taxation
The taxation charge for the interim period has been calculated on the basis of
the estimated effective tax rate for the full year of 25.6% (26 weeks ended 30
December 2023: 26.3%, 52 weeks ended 29 June 2024: 26.4%).
7 Dividends
26 weeks ended 26 weeks ended 52 weeks ended
28 December 2024
30 December 2023
29 June 2024
Dividend type In respect of period ended Pence per share £'m £'m £'m
Final 1 July 2023 27.0 - 54.5 54.5
Interim 29 June 2024 16.0 - - 32.3
Special 29 June 2024 35.0 - - 70.8
Final 29 June 2024 27.0 55.7 - -
Total dividends 55.7 54.5 157.6
The Directors have declared an interim dividend of 16.5 pence per Ordinary
Share for the financial year ending 28 June 2025. This equates to an interim
dividend of £33.4m. The Directors have also declared a special dividend of 35
pence per Ordinary Share for the period ending 28 June 2025 which equates to
£70.8m. These dividends will be paid on 8 April 2025 to shareholders on the
register at the close of business on 14 March 2025.
The interim and special dividends have not been recognised as a liability in
these interim financial statements. They will be recognised in the
Consolidated Statement of Changes in Equity in the period ending 28 June 2025.
8 Earnings per share
Basic earnings per share is calculated by dividing the profit for the period
attributable to equity holders of the Group by the weighted average number of
Ordinary Shares in issue during the period excluding ordinary shares purchased
by the Group and held as treasury shares.
For diluted earnings per share, the weighted average number of Ordinary Shares
in issue is adjusted to assume conversion of all dilutive potential Ordinary
Shares. These represent share options granted to employees where the exercise
price is less than the average market price of the Group's Ordinary Shares
during the period.
Weighted average numbers of shares: 26 weeks ended 26 weeks ended 52 weeks ended
28 December 2024
30 December 2023
29 June 2024
'000 '000 '000
Weighted average number of shares in issue during the period 202,691 202,191 202,355
Impact of share options 1,049 1,162 893
Number of shares for diluted earnings per share 203,740 203,353 203,248
26 weeks ended 26 weeks ended 52 weeks ended
28 December 2024
30 December 2023
29 June 2024
Profit for the period (£'m) 91.6 90.7 151.2
Earnings per Ordinary Share - basic 45.2p 44.9p 74.7p
Earnings per Ordinary Share - diluted 45.0p 44.6p 74.4p
9 Intangible assets and property, plant and equipment
Intangible assets Property, plant and equipment
£'m £'m
Cost
At 29 June 2024 65.9 432.9
Additions 1.8 12.8
Arising on Acquisition 1.2 0.4
Disposals - (1.4)
At 28 December 2024 68.9 444.7
Accumulated amortisation / depreciation
At 29 June 2024 62.1 259.9
Charge for the financial period 1.6 14.2
Disposals - (1.2)
At 28 December 2024 63.7 272.9
Net book value
At 29 June 2024 3.8 173.0
At 28 December 2024 5.2 171.8
All amortisation and depreciation charges have been included within operating
costs in the Consolidated Income Statement.
In November 2024 the Group acquired 100% shareholding in Home Focus Group a
group whose principal activity is the retail of homewares textiles in Ireland.
Home Focus Group trade under the "Home Focus at Hickey's" brand name.
10 Investment Property
Investment Property
£'m
Cost
At 29 June 2024 7.5
Additions 22.3
At 28 December 2024 29.8
Accumulated amortisation / depreciation
At 29 June 2024 -
Charge for the financial period 0.2
At 28 December 2024 0.2
Net book value
At 29 June 2024 7.5
At 28 December 2024 29.6
In July 2024, the Group purchased a freehold tenanted retail property in an
attractive location for £22.3m. We expect to convert this into a Dunelm store
in the future.
All amortisation and depreciation charges have been included within operating
costs in the Consolidated Income Statement.
11 Leases
Right-of-use assets included in the Consolidated Statement of Financial
Position at 28 December 2024 were as follows:
Land and buildings Motor vehicles, plant and equipment Total
£'m £'m £'m
At 29 June 2024 201.7 21.2 222.9
Additions 11.9 3.2 15.1
Additions upon acquisition 5.8 - 5.8
Disposals (0.1) - (0.1)
Depreciation (21.9) (3.0) (24.9)
At 28 December 2024 197.4 21.4 218.8
Lease liabilities included in the Consolidated Statement of Financial Position
at 28 December 2024 were as follows:
Land and buildings Motor vehicles, plant and equipment Total
£'m £'m £'m
At 29 June 2024 (228.1) (21.5) (249.6)
Additions (13.2) (3.2) (16.4)
Additions upon acquisition (5.8) - (5.8)
Disposals 0.1 - 0.1
Interest (2.9) (0.6) (3.5)
Repayment of lease liabilities 27.4 3.4 30.8
At 28 December 2024 (222.5) (21.9) (244.4)
The discount rate applied to lease liabilities ranged between 0.9% and 6.8%
(FY24 H1: 0.9% and 6.7%, FY24: 0.9% and 6.76%).
The following amounts have been recognised in the Consolidated Income
Statement:
26 weeks ended 26 weeks ended 52 weeks ended
28 December 2024
30 December 2023
29 June
2024
£'m £'m £'m
Depreciation of right-of-use assets 24.9 25.2 50.2
Impairment of right-of-use assets - - 0.9
Interest expenses (included in financial expenses) 3.5 3.0 6.1
Expense relating to short-term leases 2.3 1.4 3.7
The total cash outflow for the leases in the 26 weeks ended 28 December 2024
was £29.9m (26 weeks ended 30 December 2023: £28.7m, 52 weeks ended 29 June
2024: £56.9m).
12 Inventories
28 December 2024 30 December 2023 29 June
2024
£'m £'m £'m
Raw materials 1.1 1.5 1.3
Work in progress 0.1 0.1 0.1
Goods for resale 227.3 229.9 221.6
Total inventories 228.5 231.5 223.0
Goods for resale includes a net realisable value provision of £20.3m (FY24
H1: £21.8m, FY24: £21.3m). Write-downs of inventories to net realisable
value in the 26 weeks ended 28 December 2024 amounted to £11.4m (26 weeks
ended 30 December 2023: £15.3, 52 weeks ended 29 June 2024: FY24 £30.7m).
These were recognised as an expense during the period and were included in
cost of sales in the Consolidated Income Statement.
13 Trade and other receivables
28 December 2024 30 December 2023 29 June
2024
£'m £'m £'m
Current
Trade receivables 8.7 2.7 3.7
Other receivables 1.6 0.2 0.4
Prepayments and accrued income 24.6 22.3 22.1
Unamortised debt issue costs 2.1 - -
Total trade and other receivables 37.0 25.2 26.2
28 December 2024 30 December 2023 29 June 2024
£'m £'m £'m
Current
Trade receivables 8.7 2.7 3.7
Other receivables 1.6 0.2 0.4
Prepayments and accrued income 24.6 22.3 22.1
Unamortised debt issue costs 2.1 - -
Total trade and other receivables 37.0 25.2 26.2
14 Trade and other payables
28 December 2024 30 December 2023 29 June
2024
£'m £'m £'m
Current
Trade payables 89.3 103.4 92.3
Items in the course of clearing 88.1 - -
Accruals 70.7 61.3 67.3
Deferred income 15.4 17.2 12.5
Taxation and social security 48.0 44.2 32.3
Other payables 0.4 0.5 0.6
Total trade and other payables 311.9 226.6 205.0
15 Financial risk management and financial instruments
Financial risk factors
The Group's activities expose it to a variety of financial risks including
foreign currency risk, fair value interest rate risk, credit risk and
liquidity risk. The condensed interim financial statements do not include all
financial risk management information and disclosures required in the annual
financial statements; they should be read in conjunction with the Group's
annual financial statements as at 29 June 2024. There have been no changes in
any risk management policies since the year end.
Fair values
The fair value of the Group's financial assets and liabilities are equal to
their carrying value. The fair value of foreign currency contracts are the
present value of future cash flows based on the forward exchange rates at the
reporting date.
Fair value hierarchy
Financial instruments carried at fair value are required to be measured by
reference to the following levels:
· Level 1: quoted prices in active markets for identical assets or
liabilities
· Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
· Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs)
All derivative financial instruments carried at fair value have been measured
by a Level 2 valuation method, based on observable market data.
16 Bank loans 28 December 2024 30 December 2023 29 June
2024
£'m £'m £'m
Total borrowings - 50.0 79.0
Less: unamortised debt issue costs* (2.1) (2.3) (2.0)
Net borrowings (2.1) 47.7 77.0
*unamortised debt issue costs included in other receivables as at 28 December
2024 as there is no debt at the period end
Net cash/(debt) represented by 28 December 2024 30 December 2023 29 June
2024
Cash and cash equivalents 57.1 56.2 23.4
Total borrowings - (50.0) (79.0)
Net cash/(debt) 57.1 6.2 (55.6)
The Group has medium term bank facilities of £250.0m (FY24 H1: £250.0m;
FY24: £250.0m) committed until 6 September 2028, which may be extended by a
further year at Dunelm's request, subject to lender consent. This is with an
associated accordion facility of £100.0m, subject to lender consent (FY24 H1:
£100.0m; FY24: £100.0m). As at 28 December 2024 none of this facility was
drawn down (FY24 H1: £50.0m; FY24: £79.0m). The Group also has an
uncommitted overdraft facility of £10.0m.
17 Commitments & Contingent liabilities
As at 28 December 2024 the Group had entered into capital contracts amounting
to £3.9m (FY24 H1: £2.2m; FY24: £1.5m).
The Group had no contingent liabilities at the period end date (FY24 H1:
£nil; FY24: £nil).
18 Announcement
The Interim Results, comprising the Interim Report and Financial Statements,
was approved by the Board on 11 February 2025. Copies are available from
www.corporate.dunelm.com
(https://protect.checkpoint.com/v2/r06/___https:/www.corporate.dunelm.com___.ZXV3MjpuZXh0MTU6YzpvOjJjMjgxZWUwYjI2OTg4OTVkNDQ5ZTZkMzAyYTEwODNiOjc6ZWJkMjo4YzFkMjBiMDhlNzQzYTg3OWM3ZTQ0NDJjNGRiNTRlMmRiNDg3OGNhM2EzZjI5ODE5MThiYzkzN2QwNmFlZjcwOnA6RjpU)
.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR PKKBQDBKBNBDRecent news on Dunelm
See all newsREG - Dunelm Group plc - Total Voting Rights
AnnouncementREG - Dunelm Group plc - Third quarter trading update
AnnouncementREG - Dunelm Group plc - Block Listing Six Monthly Return
AnnouncementREG - Dunelm Group plc - Total Voting Rights
AnnouncementREG - Dunelm Group plc - Transaction in Own Shares
Announcement