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

DunelmAnnouncement

16/01/2025 07:00

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RNS Number : 5091T  Dunelm Group plc  16 January 2025

16 January 2025

Dunelm Group plc

 

Second quarter and first half trading update

 

Solid sales growth and strong gross margin in a challenging environment

 

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

 

                           Q2       Q2 YoY   H1      H1 YoY
 Total sales               £490m   +1.6%     £894m   +2.4%
 Digital % total sales(1)  40%     +3ppts    39%     +3ppts

( )

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

 

Highlights

·    Solid sales growth of 2.4% to £894m for the first half

·    Sales growth of 1.6% in Q2 in a challenging market, with digital
participation up 3ppts to 40%

·    Gross margin increased 10bps year-on-year in H1; strong operational
grip maintained on input costs alongside exceptional customer value

·    Progress against our strategic goals, with meaningful improvements to
our online customer experience, our first inner London store and 13 small
stores acquired in Ireland. Anticipate opening five new superstores in the
second half of FY25

·    Against the market backdrop and ongoing cost challenges facing our
sector, PBT for FY25 is still expected to be within the range of market
expectations(2)

( )

(2) Company compiled consensus average of analysts' expectations for FY25 PBT
is £213m, with a range of £207m to £217m

 

Continued sales growth in a challenging market

 

Total sales of £894m in the first half were up 2.4%, with 1.6% sales growth
delivered in the second quarter. We are pleased with this solid performance in
a market which remained volatile. We believe that we have again gained market
share(3), demonstrating the value, relevance and choice we continue to offer
our customers.

 

Digital participation was up 3ppts to 39% in the first half, as customers
continued to respond well to the ongoing improvements we are making to our
digital experience. Click and Collect sales grew strongly as we further
increased the breadth of our ranges and the proportion of products available
to be collected in stores.

 

Our furniture categories performed particularly well, from our sofa
collections through to smaller items such as dining chairs and coffee tables.
Our growing range of products at outstanding price points, with attractive
delivery options, continues to improve our proposition and resonate well with
customers.

 

(3) We will report market share as usual using GlobalData at our Interim
Results on 11 February 2025

 

Gross margin

 

Gross margin remains well controlled, with strong operational grip driving a
10bps year-on-year improvement. Retail prices were broadly stable in the
period, as we retained discipline both on promotional activity and across our
'good, better, best' value tiers. We now expect full year gross margin to be
in the upper half of our guided range of 51 - 52%.

 

Strategic and operational update

Throughout the quarter, we continued to drive progress against each of our
strategic pillars: elevating our product offer; connecting with more
customers; and harnessing our operational capabilities. These pillars are
interconnected and provide structure for our long-term priorities and
investment plans.

 

In the quarter, we acquired Homefocus Group Limited in Ireland, giving us a
platform in a new geography through an existing footprint of 13 small stores,
where we are already selling Dunelm products. We have also brought Dunelm to
inner London for the first time, opening our Westfield London store ahead of
the Christmas 'peak' trading period. We are learning from these new ventures
and are excited about the opportunities they provide.

 

We also remain focussed on the opening of new UK superstores, and anticipate
opening five in the second half.

 

Finally, we are mindful of the impact of the Autumn Budget announcement on our
business, suppliers and customers. As a large employer, with over 11,500
colleagues, we have previously highlighted the impact of ongoing wage
inflation. Whilst the National Living Wage increase was largely anticipated,
the increase in employer National Insurance Contributions is an additional
cost headwind. Initiatives to drive productivity across the business are
underway, and as these initiatives mature, we anticipate mitigating the upward
pressure on costs over the medium term.

 

Summary and outlook

We delivered a solid performance in the first half, with sales and volume
growth alongside a stronger gross margin. We have continued to make progress
against our strategic priorities, investing both for now, and the longer-term.
Given this performance against the current market backdrop, and ongoing cost
challenges for our sector, we still expect PBT to be within the range of
market expectations(4) for FY25.

 

As a market leader, looking ahead we believe that this environment, though
challenging, creates more opportunities for us to continue to raise the bar on
our customer proposition and reach our next market share milestone of 10% in
the medium term.

 

(4) Company compiled consensus average of analysts' expectations for FY25 PBT
is £213m, with a range of £207m to £217m

 

Nick Wilkinson, Chief Executive Officer, commented:

 

"We're pleased with our performance in the first half; we are growing sales
and volume, with customers again responding well to the value and choice we
offer across our ranges.

 

"At the same time, we've made significant strategic progress across multiple
initiatives which are helping us to improve our attractive, specialist offer
and continue to gain market share. We have taken our first steps outside the
UK with the acquisition of 13 stores in Ireland, opened our first inner London
store in Westfield, and made further improvements to our online customer
experience which is contributing to continued strong digital growth.

 

"As we move into the second half of FY25, we have successfully launched our
Winter Sale which is being well received by customers seeking amazing value
across a wide choice of relevant products for the colder months. As we
navigate this challenging environment, we see even more opportunities to
harness our unique business model, raise the bar on our proposition and fulfil
our ambitions as The Home of Homes."

 

For further information please contact:

 Dunelm Group plc                                   investorrelations@dunelm.com (mailto: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 (mailto:dunelm@mhpgroup.com)

 

Next scheduled event:

Dunelm will make its interim results announcement on 11 February 2025. 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 hugo.harris@mhpgroup.com
(mailto:hugo.harris@mhpgroup.com) . A copy of the presentation will be made
available at https://corporate.dunelm.com
(https://protect.checkpoint.com/v2/r06/___https:/corporate.dunelm.com/___.ZXV3MjpuZXh0MTU6YzpvOjQxMzU1MmE1MWEwYTcxMmNjYjM1ZTk0M2YxNjY4NWJlOjc6MzU5MTpmNWU5Nzg3NGMzNjlmODFkZWNhMjRjODgzMDk1NGYzNmU2ZDA4NmFmYTM1NWI5YTkxZjU2MjA5N2VhZjA0ODM4OnA6RjpU)
 

 

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.11,500 colleagues. It has
been listed on the London Stock Exchange since October 2006 (DNLM.L) and
the business has returned c.£1.5bn in distributions to shareholders since
IPO(5).

 

(5) Ordinary dividends plus special distributions

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