REG - Dunelm Group plc - Third quarter trading update

DunelmAnnouncement

17/04/2025 07:00

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RNS Number : 3654F  Dunelm Group plc  17 April 2025

 

 

 

 

17 April 2025

Dunelm Group plc

 

Third quarter trading update

 

Strong sales and gross margin; on track to deliver FY PBT in line with
consensus

 

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares
retailer, updates on trading for the 13-week period ended 29 March 2025.

 

                           Q3              Year-to-date
                           FY25    YoY     FY25      YoY
 Total sales               £462m   +6.3%   £1,356m   +3.7%
 Digital % total sales(1)  41%     +4ppts  39%       +3ppts

( )

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

 

Highlights

·   Strong sales growth of 6.3% to £462m with broad-based growth across
our homewares and furniture categories

·    Digital participation up 4ppts to 41%

·    Gross margin up 30bps year-on-year, with full-year guidance unchanged
at 51.5% - 52.0%

·    Continued strategic progress including further product elevation and
the opening of our 200(th) store

·    PBT for FY25 expected to be in line with consensus(2)

( )

(2) Company compiled consensus average of analysts' expectations for FY25 PBT
is £208m, with a range of £204m to £214m

 

Strong sales growth across our categories

 

We are pleased to report strong sales growth of 6.3% to £462m in the third
quarter. Our sales and volume growth was broad-based across our categories,
and we saw a good start to our new Spring / Summer ranges, as well as a
successful Winter Sale at the beginning of the period. Furniture categories
again performed particularly well, as our extended ranges and bolder designs
resonated with customers. Alongside this, we continued to grow our core
textile-focussed categories, from pillows to rugs, reflecting the ongoing work
we are doing to elevate our products, offering quality at all price points.

 

Digital participation was up 4ppts year-on-year to 41%, as we have continued
to optimise the online customer experience, with AI-powered search and
recommendations improving relevance and conversion. Performance was also
driven by strong Click & Collect sales, which again grew significantly in
the quarter, benefiting from extended ranges and further optimisation of our
fulfilment channels, with smaller items of furniture now available.

 

Gross margin

 

Gross margin improved by 30bps year-on-year. We continue to exercise
operational grip on input costs and with prices held broadly stable, customers
continue to find great value in our ranges at all price / quality tiers. Our
full-year gross margin guidance is unchanged, at between 51.5% and 52.0%.

 

Strategic and operational update

We have made further progress with our strategic priorities, which frame our
approach to sustainable, long-term growth, and build on our unique and
specialist proposition as the Home of Homes.

 

Our elevated product offering continues to inspire customers, with our new
Sophie Robinson collaboration offering bolder, more colourful options giving
customers new ideas on how to create a maximalist look across their home.
Reflecting the relatively warm spring so far, the performance of our Summer
Living ranges has been encouraging, as customers get their gardens ready for
summer.

 

We are continuing to connect with more customers, increasingly using data and
insight to drive decision-making across the business, from enhancing our
digital customer experience to expanding our store portfolio. In the quarter,
we opened two new stores: a larger superstore in Merthyr Tydfil and a smaller
superstore in Bracknell, and we relocated our Peterborough superstore to an
improved site after the period end. The total estate now comprises 200 stores,
and whilst this is a notable milestone, we continue to seek out new
opportunities to bring Dunelm to more customers. We are on track with our
plans to open five new superstores in the full year (including one
relocation).

 

We have also completed a freehold acquisition in Kingston upon Thames, a key
target area of 'white space', which we expect to open as a Dunelm store in
FY26. As guided at our interim results in February, as a result of this
acquisition we now expect capex for the year to be between £60m and £70m.

 

Maintaining our focus on harnessing our operational capabilities, we have also
started the rollout of self-service tills across the estate, including in all
of our new superstores, and with plans to install in over 100 stores by the
end of FY26.

 

Summary and outlook

We delivered a strong sales performance in the third quarter, in terms of both
quantity and quality. At the same time, we have continued to offer outstanding
value to our customers, increasing volumes and gross margin year-on-year, with
growth across our categories. We expect to deliver PBT for FY25 in line with
consensus(3).

 

We are pleased that our own performance and that of the wider market has been
stronger in Q3 than we saw in the first half, however it is too early to say
whether or not we are seeing an improved trend. We are also mindful of
increased levels of uncertainty and volatility in the current environment, and
the known labour cost headwinds. We remain confident in our plans and the
strategic progress we are making, and are on track to achieve our milestone of
10% market share in the medium term.

 

(3) Company compiled consensus average of analysts' expectations for FY25 PBT
is £208m, with a range of £204m to £214m

 

 

Nick Wilkinson, Chief Executive Officer, commented:

 

"We've had a good third quarter, with strong growth and further strategic
progress. The Dunelm brand continues to attract a broad range of customers,
offering outstanding value and quality, and we're really pleased with how our
new ranges are being received.

 

"We remain committed to driving market share gains through growth across all
our channels. March saw the opening of Dunelm's 200th store in Merthyr Tydfil,
an exciting milestone, and we continue to see new opportunities, filling
'white space' in our physical estate through a variety of store formats. At
the same time, we're improving customers' digital experience, including
through Click & Collect, which has continued to gain momentum.

 

"Our customers are now enjoying getting their homes and gardens ready for
summer and we're focused on being as relevant as possible for the warmer
months ahead. We remain very mindful of the wider backdrop and the impact of
increased uncertainty on consumer sentiment, but maintain our focus on
strengthening Dunelm's position 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                                                07770 753 544
 Oliver Hughes / Rachel Farrington / Charles Hirst  dunelm@mhpgroup.com (mailto:dunelm@mhpgroup.com)

Next scheduled event:

Dunelm will make its fourth quarter trading update on 17 July 2025.

Quarterly analysis:

                        52 weeks to 28 June 2025
                        Q1        Q2        H1        Q3        Q4    H2    FY
 Total sales            £403.2m   £490.5m   £893.7m   £461.9m
 Total sales growth     +3.5%     +1.6%     +2.4%     +6.3%
 Digital % total sales  37%       40%       39%       41%

 

 

                        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 200 stores across the UK and Ireland and has developed a
successful online offer through dunelm.com which includes home delivery and
Click & Collect options. 157 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.12,000 colleagues. It has
been listed on the London Stock Exchange since October 2006 (DNLM.L) and
the business has returned more than £1.5bn in distributions to shareholders
since IPO(4).

 

(4) Ordinary dividends plus special distributions

 

 

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