REG - Dunelm Group plc - Q4 and full year trading update

DunelmAnnouncement

18/07/2024 07:00

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RNS Number : 8387W  Dunelm Group plc  18 July 2024

 

 

 

18 July 2024

Dunelm Group plc

 

Q4 and full year trading update

 

Strong final quarter, PBT slightly ahead of expectations

 

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares
retailer, updates on trading for the 13-week period ended 29 June 2024 and for
the full year.

 

                           Full year FY24   YoY    Q4 FY24  YoY
 Total sales               £1,706m         +4%     £399m    +5%
 Digital % total sales(1)  37%             +1ppts  40%      +1ppts

( )

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

 

 

Highlights

·    Q4 sales growth of 5%, with good performance from both store and
digital channels

·    Total sales growth of 4% for the full year, driven by volume

·    Full-year gross margin expected to be 170bps up year-on-year,
benefiting from net freight tailwinds

·    New store opening programme on track with six new stores opened in
FY24, including one relocation

·    FY24 PBT expected to be slightly ahead of current market
expectations(2)

 

(2) Company compiled consensus average of analysts' expectations for FY24 PBT
is £200m

 

Continued volume-driven growth and a strong Summer Sale

 

Q4 FY24

 

We are pleased to report strong sales growth in the final quarter of FY24,
with total sales up 5% to £399m. Sales growth continued to be driven by
increased volumes. We saw growth in both store and digital channels, with
digital participation up 1ppt to 40%.

 

We remain focussed on offering outstanding value and quality to our customers,
and believe that we have continued to gain market share against a backdrop of
ongoing macro volatility and subdued consumer sentiment.

 

We had a good summer sale period in June, with customers finding the
attractive offers they were looking for, as well as buying full priced lines,
and responding well to our new products.

 

Aside from outdoor furniture, which saw softer sales due to the extended
period of cooler weather, sales growth was fairly consistent across our
categories in the quarter, demonstrating our broad customer appeal and the
relevance of our product ranges.

 

FY24 full year

 

Total sales of £1,706m grew by 4% versus FY23. Against a challenging consumer
environment, we have driven top line growth through volume, leveraging the
strength of our proposition by focussing on value, choice and relevance across
our growing product range, which resonates with customers.

 

PBT expected to be slightly ahead of market expectations

 

Gross margin is now expected to be c.170bps higher than the prior year. Lower
year-on-year freight rates have continued to be a tailwind, with the impact of
surcharges mitigated. Margins were also strong through the summer sale period,
with both full price and discounted margins strengthening year-on-year.

 

Profit before tax is therefore expected to be slightly ahead of current market
expectations for FY24, with Company compiled consensus at £200m. This
performance reflects our inherent resilience and agility in another
challenging year.

 

Strategic and operational update

Throughout the year we focused on further building our brand and customer
offer as the 'Home of Homes', using our specialist skills and knowledge to
best serve our customers, both in terms of expanding the breadth and depth of
our product offering, and by developing our channels and overall customer
journey.

 

In the quarter we opened a new store in Brighton and relocated our Edinburgh
store to a better site, taking our total store openings to six for the full
year. The new stores were a mixture of superstores and smaller format stores,
and we are encouraged by their early performance.

 

We have continued to invest in our digital platform, further developing and
enhancing the customer experience. Improvements in the quarter included
introducing 'back in stock' notifications and increasing the number of
products available for Click & Collect.

 

We remain focused on developing our operational capability, and in the quarter
opened a new depot in Barnsley, replacing our existing facility with
additional capacity to better serve our Home Delivery Network.

 

Summary and outlook

We are pleased with our performance in the final quarter and across the year
as a whole. We have effectively managed uncertain market conditions whilst
retaining our focus on, and commitment to, our customers - offering
outstanding value, continuously elevating our product offer, and further
developing the proposition. This has resulted in volume-driven sales growth,
alongside increased gross margin and PBT.

 

Whilst there are indicators that the consumer outlook is set to improve, the
impact and timing on our markets remains unpredictable. However, we remain
confident in our ability to deliver further market share gains over the medium
term. We are excited by the opportunities ahead, with our confidence
underpinned by our commitment to long-term investment in our product, customer
proposition and business capabilities, to ensure sustainable growth.

 

Nick Wilkinson, Chief Executive Officer, commented:

"We delivered another strong performance in Q4, with continued volume-driven
sales growth across both store and digital channels. Amidst ongoing consumer
caution, our unrelenting focus on value and choice means the Dunelm
proposition has continued to resonate with customers, and we saw both
full-priced and discounted lines trade well during our summer sale period.

"Throughout the year, we grew sales and continued to exercise tight cost
control in an environment of high inflation. Our strong gross margin
performance means we now expect our FY24 profit before tax to be slightly
ahead of expectations.

"Going into FY25, we have a significant opportunity ahead of us. We are
finding quality sites for new stores, and are increasingly confident in our
smaller format stores. We are also continuing to invest in both our digital
offer and wider operations to support further market share gains. However, we
will need to maintain strong operational grip given ongoing wage inflation.
Notwithstanding the continuing uncertainty in our markets, we're both excited
and confident in our plans."

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 make its preliminary results announcement on 11 September
2024. There will be an in-person presentation for analysts and institutional
investors 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. A
copy of the presentation will be made available
at https://corporate.dunelm.com
(https://protect.checkpoint.com/v2/___https:/corporate.dunelm.com/___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzowNGI2Zjg1MzcxYzNlZTM5YzBkODdlMGJiNDMyYzQyNzo2OmMzZDQ6MGNmOWY0OGZkMTA4ZTBiNGQ1Yjg3M2YwZjI1MDYwYjkzMjZiYmIwNTVmZDA4YTJkZDM1YzEwM2I2ZWQyZjFhYjpwOkY6Tg)
 

Quarterly analysis:

                        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%

 

 

                        52 weeks to 1 July 2023
                        Q1        Q2        H1        Q3        Q4        H2        FY
 Total sales            £356.7m   £478.3m   £835.0m   £423.3m   £380.5m   £803.8m   £1,638.8m
 Total sales growth     -8.3%     +17.6%    +5.0%     +6.1%     +6.1%     +6.1%     +5.5%
 Digital % total sales  33%       35%       34%       36%       39%       37%       36%

 

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
a growing range of 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. 154 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 over 11,000 colleagues. It
has been listed on the London Stock Exchange since October 2006 (DNLM.L)
and the business has returned over £1bn in distributions to shareholders in
the last ten years(3).

 

(3) Ordinary dividends plus special dividends plus special distributions

 

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