REG - Dunelm Group plc - Third quarter trading update

DunelmAnnouncement

18/04/2024 07:00

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RNS Number : 0443L  Dunelm Group plc  18 April 2024

 

 

18 April 2024

Dunelm Group plc

 

Third quarter trading update

 

Continued sales growth, driven by volume

 

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares
retailer, updates on trading for the 13-week period ended 30 March 2024.

 

                           Q3              Year-to-date
                           FY24     YoY    FY24      YoY
 Total sales               £435m   +3%     £1,307m   +4%
 Digital % total sales(1)  37%     +1ppts  36%       +1ppts

( )

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

 

 

Highlights

·    Total sales in Q3 increased by 3% to £435m, driven by volume

·    Growth in both store and digital channels, with digital sales
participation up 1ppt to 37%

·    Increased gross margin by 60bps year-on-year, maintaining strong
operational grip while continuing to offer outstanding value

·    Full year gross margin now expected to expand by c.110bps
year-on-year

·    Continued to strengthen our customer offer as the 'Home of Homes'

·    Despite a challenging sales environment, we currently expect FY24 PBT
to be broadly in line with market expectations(2)

 

(2) Company compiled consensus average of analysts' expectations for FY24 PBT
is £202m, with a range of £200m to £205m

 

Continuing to deliver sales growth in an uncertain market

Total sales increased by 3% to £435m, despite both the homewares and
furniture markets remaining challenging. As has been widely reported, trading
conditions have continued to be volatile with March in particular seeing
softer levels of demand. However against this backdrop, our offer continues to
resonate with customers and our volume-driven sales performance is underpinned
by growth across both store and digital channels. We therefore believe we have
continued to gain further market share in the period.

 

The mix of digital sales increased by 1ppt reflecting the ongoing improvements
we are making to our online customer proposition, such as improving the speed
of the website.

 

Gross margin

Gross margin remained strong and increased by 60bps in the quarter. As
expected, the rate of year-on-year improvement is slowing as we begin to lap
the benefit of lower freight costs, whilst foreign exchange movements remain a
headwind. We are managing the ongoing impact of Red Sea surcharges, and
despite this, we now expect full year gross margin to be ahead of previous
guidance and to increase by c.110bps year-on-year.

 

Strategic and operational update

We are continuing to make good progress building the 'Home of Homes' by
strengthening our customer offer, extending and digitalising our total retail
system and evolving our marketing ecosystem. We have successfully launched our
spring / summer product ranges alongside our latest brand marketing campaign,
which extends our brand platform by positioning Dunelm as the place to go for
all of our customers' home needs. We expect the television campaign to be
viewed over 200 million times, with further exposure across radio, social, and
other digital channels.

 

We remain on track to hit our store openings target for FY24, with four new
stores open to date and a further two (including one relocation) planned to
open by the end of the year. We have also continued to develop our digital
customer proposition, now offering further flexibility on customer delivery
options and multi-channel giftcards.

 

We are continuing to apply our usual operational grip, including managing the
impact of Red Sea disruption. Our availability has remained generally strong,
benefitting from our committed supplier model, which along with the breadth of
our ranges, has meant that sales have been largely unaffected to date.

 

Outlook

We have continued to deliver sales growth in a challenging market, whilst
improving our gross margin. While there are signs that the outlook for UK
consumers may be easing in some areas, it remains difficult to predict when
this might translate into better conditions in our markets. Despite the
trading environment, we currently expect FY24 PBT to be broadly in line with
market expectations(3).

 

Our commitment to developing and investing in our customer proposition leaves
us well positioned and gives us confidence in our ability to gain further
market share. We remain excited about the future opportunity for Dunelm and
confident that we have the right strategy in place to develop our business for
the long term.

 

(3) Company compiled consensus average of analysts' expectations for FY24 PBT
is £202m, with a range of £200m to £205m

 

Nick Wilkinson, Chief Executive Officer, commented:

"We have delivered a resilient performance in Q3, with continued volume-based
sales growth through a period of more challenging and volatile market
conditions. Whilst discretionary spend remains under pressure, our relevant
and attractive product offer continues to resonate with customers as they shop
across our broad ranges to find quality and value for all areas of the home.
 

"This performance reflects our deep-rooted understanding of our customers and
the effectiveness of a total retail system which continues to drive growth
across store and digital channels, bringing further market share gains. At the
same time, our operational grip continues to mitigate ongoing cost headwinds
and has supported a strong gross margin performance.

"Looking ahead, we are excited about strengthening our customer offer, and the
breadth of growth opportunities this presents. Consumer behaviour continues to
be difficult to predict, however we remain confident in our ability to
navigate current conditions whilst delivering further sustainable growth and
market share gains."

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 release its fourth quarter trading update on 18 July 2024.

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
 Total sales growth     +9.2%     +1.0%     +4.5%     +2.6%
 Digital % total sales  35%       37%       36%       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 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(4).

 

(4) Ordinary dividends plus special dividends plus special distributions

 

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