REG - Dunelm Group plc - Third Quarter Trading Update

DunelmAnnouncement

20/04/2023 07:00

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RNS Number : 8279W  Dunelm Group plc  20 April 2023

 

 

20 April 2023

Dunelm Group plc

 

Third quarter trading update

 

Strong trading with expectations unchanged

 

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares
retailer, updates on trading for the 13-week period ended 1 April 2023.

 

                           Q3                      Year-to-date
                           FY23    FY22    YoY     FY23      FY22      YoY
 Total sales               £423m   £399m   +6%     £1,258m   £1,195m   +5%
 Digital % total sales(1)  36%     35%     +1ppts  35%       34%       +1ppts

( )

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

 

Highlights

·    Customers continue to respond well to our proposition, with broad
based growth across our categories, both in stores and online

·    Strong Q3 sales of £423m, up 6%, or c.10% after adjusting for the
timing of the Winter Sale(2)

·    FY23 PBT expectations remain unchanged, and in line with current
analysts' consensus(3)

 

(2) Due to the 53(rd) week at the end of FY22, six days of the Winter Sale
fell into Q2 this year (the Sale began in Q3 last year)

(3) The current company compiled consensus average of analysts' expectations
for FY23 PBT is £185m, with a range of £171m to £198m

 

A good Winter Sale and strong start from new spring lines

 

Total sales of £423m in Q3 increased by 6% compared to the same period last
year. As reported previously, the timing of the Winter Sale benefitted the
sales growth rate in Q2 by c.4ppts, and negatively impacted the underlying
growth rate in Q3 by the same amount(2).

 

Our Winter Sale resonated particularly well with our savvy home-loving
customers, who took advantage of exceptional quality and value across our
categories and price points. We also saw a good response to our newly
introduced designs this spring as we refreshed our core product ranges and
added to our Conscious Choice range of sustainably-focussed lines,
complemented by relevant seasonal items such as garden decorations and window
dressings.

 

Our total retail system, comprising both our store estate and online offer, is
serving us well, with strong growth in both channels. The new stores we have
opened this year, which include both larger and smaller formats, continue to
perform ahead of our expectations. Our investment in digitalising the business
is also delivering strong returns, with digital sales making up 36% of total
sales in the quarter, 1ppt higher than the same period last year.

 

Gross margin

 

We continue to maintain a tight operational grip on gross margin, which in Q3
was consistent with our expectations; 30bps lower than last year, including a
tailwind of c.50bps from the timing of the Winter Sale.

 

Whilst the outlook for input costs and retail pricing remains dynamic, our
tight grip enables us to remain focussed on offering our customers exceptional
value for money. We continue to expect gross margin for the full year to be
c.50%, with a lower gross margin in the second half due to our two Sale
events.

 

Summary and outlook

We performed well during Q3, with strong trading throughout the period,
including a successful Winter Sale, and good demand for our new collections
for spring and summer. Whilst the consumer outlook remains unpredictable, we
remain focussed on strengthening our customer offer to provide unbeatable
choice and value for every space, style and budget.

 

Our expectations for FY23 are unchanged from the Interim results announcement
in February, and therefore we expect PBT for the full year to be in line with
current market expectations(3).

 

 

Nick Wilkinson, Chief Executive Officer, commented:

"We are seeing strong momentum in the business as customers continue to
appreciate the quality and value across the Dunelm range, despite a
challenging trading backdrop. This was apparent through our successful Winter
Sale and the positive launch of our new ranges for spring and summer as
customers look forward to longer days and outdoor living.

"As we continue to seize the many opportunities we see, we are investing for
the long term and making good progress against our plans, which include the
ongoing development and extension of our product ranges, building our customer
data platform and optimising our marketing channels. These plans give us good
confidence for ongoing success.

"Our core values continue to guide the business and during the quarter we
passed the £1m milestone in funds raised for our charity partner, Mind. I am
particularly proud of our colleagues' efforts to support our communities at
such an important time."

 

 

For further information please contact:

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

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

Next scheduled event:

Dunelm will release its fourth quarter trading update on 20 July 2023.

Quarterly analysis:

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

 

                        53 weeks to 2 July 2022
                        Q1        Q2        H1        Q3        Q4        H2        FY
 Total sales            £388.8m   £406.8m   £795.6m   £399.0m   £386.7m   £785.7m   £1,581.4m
 Total sales growth     8.3%      12.9%     10.6%     68.6%     1.7%      27.4%     18.4%
 Digital % total sales  33%       33%       33%       35%       37%       36%       35%

 

Notes to Editors

Dunelm is the UK's market leader in homewares, with a specialist offering
for customers across multiple categories via its 179 predominantly out-of-town
superstores and website, dunelm.com.

 

The business was founded in 1979 as a market stall, selling ready-made
curtains. The first shop was opened in Leicester in 1984, with the first
superstore opening in 1991. With a vision to become the 1(st) Choice for
Home, Dunelm offers quality, value and style throughout its extensive
product range, alongside services such as Home Delivery, Click & Collect
and Made to Measure window treatments. From its textiles heritage in areas
such as bedding, curtains, cushions, quilts and pillows, Dunelm has
broadened its range into categories including furniture, kitchenware, dining,
lighting, outdoor, craft and decoration. Its c.60,000 product lines include
specialist own brands and labels such as Dorma and Fogarty, sourced from
long-term committed suppliers.

 

Dunelm's purpose is 'To help create the joy of truly feeling at home, now
and for generations to come'. It has an ambitious 'Pathway to Zero' strategy
designed to drive its approach to climate change, with a focus on reducing
carbon emissions and developing a circular economy mindset. In 2022 Dunelm
launched 'Conscious Choice', a collection of products which help its customers
make more thoughtful decisions through products that last longer and are made
from more sustainable materials.

 

The business is headquartered in Leicester and employs over 11,000
colleagues. It has been listed on the London Stock Exchange since October
2006 (DNLM.L) and has a current market capitalisation of
approximately £2.3bn.

 

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