REG - Dunelm Group plc - Second quarter and first half trading update

DunelmAnnouncement

18/01/2024 07:00

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RNS Number : 0732A  Dunelm Group plc  18 January 2024

 

18 January 2024

Dunelm Group plc

 

Second quarter and first half trading update

 

Continued sales growth and strong gross margin performance

 

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares
retailer, updates on trading for the 26-week period ended 30 December 2023.

 

                           Q2       Q2 YoY   H1      H1 YoY
 Total sales               £483m   +1.0%     £872m   +4.5%
 Digital % total sales(1)  37%     +2ppts    36%     +2ppts

( )

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

 

Highlights

·  Strong sales growth in the first half, with total sales increasing by
4.5% to £872m, driven by volume

· Continued sales growth in Q2 in a challenging market, with total sales
increasing by 1.0% against very strong comparatives (underlying Q2 growth was
14% last year(2)) and the digital sales mix up 2ppts to 37%

·  Increased gross margin by 160bps in the first half, while offering
outstanding value

·  Opened three new stores during the second quarter, taking the total to
183, and remain on track to achieve our full year store opening plans

·  Our PBT expectations for the full year are in line with market
expectations(3)

 

(2) Total growth of 18% in Q2 FY23 benefitted from the timing of our Winter
Sale. Underlying growth in Q2 FY23 was 14%

(3) Company compiled consensus average of analysts' expectations for FY24 PBT
is £202m, with a range of £199m to £207m

 

Continued sales growth against a strong comparative period

We are pleased to report strong sales growth of 4.5% during the first half,
with 1.0% growth delivered in Q2, driven by volume, against a particularly
strong comparative period when sales grew by 14% on an underlying basis. We
are confident that we are continuing to gain share(4) in a market which has
been characterised by volatile week-to-week trading patterns, particularly
through Q2, reflecting the ongoing pressures on consumers' discretionary
spend.

 

Customers continued to be attracted to the choice and value we consistently
offer across our ranges. We were particularly pleased with sales in our cook
and dine category, which benefitted from improved ranges as we have developed
our product mastery, and strong sell through of our Christmas products.

 

(4) We will report market share as usual using GlobalData at our Interim
results in February

 

Gross margin

We delivered sales growth whilst also achieving significant improvements in
gross margin, evidencing our ability to offer outstanding value alongside
disciplined promotional activity. Gross margin in H1 was 160bps higher than
FY23, benefitting from improvements in freight rates, which were slightly
better than expected. We expect headwinds in the second half, however we
remain comfortable with our guidance for a year-on-year gross margin increase
of c.100bps.

 

Strategic and operational update

During the quarter, we made further strategic progress. The opening of three
new stores in Q2 saw us extend our total retail system to 183 stores, and we
have now opened a total of four stores so far this financial year, in a
variety of formats and sizes. We are delighted by the enthusiastic response
from our local communities to these new stores and are on track with our store
opening plans for the full year.

 

We also continued with our plans to improve the customer proposition across
our total retail system. We increased choice through expanding ranges across
our categories, and continued to optimise dunelm.com, which performed well
during our busiest trading weeks, with improvements to both site speed and
customer experience.

 

We launched our 'Home of Homes' brand platform with our marketing campaign
which ran until November. This Christmas, our community-focused 'Delivering
Joy' initiative continued to go from strength to strength, with our colleagues
and customers donating over 125,000 gifts to local good causes, twice as many
as last year.

 

Outlook

Growth in the first half was driven by customer demand for our consistent,
outstanding value proposition. Whilst we are conscious that the outlook for
consumer spending remains unpredictable and market conditions volatile, we are
confident that we can deliver further market share gains and retain our tight
operational grip on costs. Our expectations for full year PBT are in line with
market expectations(5).

 

(5) Company compiled consensus average of analysts' expectations for FY24 PBT
is £202m, with a range of £199m to £207m

 

Nick Wilkinson, Chief Executive Officer, commented:

"The breadth of our range and outstanding value of our proposition continues
to be well received by customers, resulting in a strong sales performance for
the first half despite a tough market backdrop.

"Consumers remain under pressure and are actively seeking true value at all
price points. Our customer offer and positioning as the 'Home of Homes'
resonates particularly well in this environment, and we are confident we have
continued to gain market share. At the same time, our strong operational grip
continues to help us navigate the difficult environment and manage our
margins.

"Supporting our communities remains at the heart of Dunelm and I would like to
thank all our colleagues and customers for making our recent Delivering Joy
campaign our biggest ever, donating an incredible 125,000 gifts to local good
causes during the Christmas period.

"Looking ahead, we remain excited about the compelling opportunity for growth
for our business. We have continued to execute at pace on our strategic plans,
opening four new stores over the first half of the year, whilst continuing to
expand our ranges and improve our digital offer. Our new Spring collections
look fantastic in store and are being really well received by customers as we
reach the end of our Winter Sale, leaving us well placed to make further
progress in the months ahead."

 

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 interim results announcement on 14 February
2024. There will be an in-person presentation for analysts and institutional
investors in the 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 christian.harte@mhpgroup.com. A copy of the presentation will be made
available at https://corporate.dunelm.com (https://corporate.dunelm.com/)

Quarterly analysis:

                        52 weeks to 29 June 2024
                        Q1        Q2        H1        Q3    Q4    H2    FY
 Total sales            £389.6m   £482.9m   £872.5m
 Total sales growth     +9.2%     +1.0%     +4.5%
 Digital % total sales  35%       37%       36%

 

                        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 183 stores across the UK and has developed a successful
online offer through dunelm.com which includes home delivery and Click &
Collect options. 152 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(6).

 

(6) Ordinary dividends plus special dividends plus special distributions

 

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