Year-end Trading Update

RNS Number : 4585D

Dunelm Group plc

07 July 2016

 

7th July 2016

Year-end Trading Update

'Delivering Everyday Value'

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, reports the following trading update for the final quarter and for the financial year ended 2^nd July 2016.

Revenue

Total revenue for the fourth quarter grew by 1.8% to £203.8m. Total like-for-like (LFL) growth (combining LFL stores and Home Delivery) decreased by 0.6%, although this was adversely impacted by a combination of an earlier Easter and the fact that the previous financial year included a 53^rd week. Adjusting for these calendar impacts, underlying LFL performance was +2.9% for the 13 weeks to 2^nd July 2016.

	13 weeks to 2nd July 2016			52 weeks to 2nd July 2016
	Sales (£m)	YoY Growth (£m)	YoY Growth (%)	Sales (£m)	YoY Growth (£m)	YoY Growth (%)
LFL stores	165.1	-3.4	-2.0%	729.0	7.4	1.0%
Home Delivery	16.0	2.3	16.8%	61.9	11.7	23.2%
Total LFL	181.1	-1.1	-0.6%	790.9	19.1	2.5%
Non-LFL stores	22.7	4.8		90.0	39.1
Total	203.8	3.7	1.8%	880.9	58.2	7.1%

The difference between reported and underlying LFL, predominantly relating to the impact of the 53^rd week in the prior year, can be summarised for the year as follows:

	Q1	Q2	Q3	Q4	FY
Reported LFL	5.5%	3.9%	1.1%	-0.6%	2.5%
Underlying LFL	3.9%	-0.8%	5.1%	2.9%	2.5%
Variance	1.6%	4.7%	-4.0%	-3.5%	0.0%

Final Quarter Underlying performance

Sales performance in the quarter reflected:

-    A good Easter performance helped by being earlier in the calendar;

-    Volatile trading through the quarter driven by changeable weather conditions and a general retail slow-down prior to the EU referendum; and

-    Continuing good growth in the on-line business, including a 16.8% increase in home delivery sales.

Gross Margin Percentage

Gross margin for the quarter was approximately 80bps higher than the comparator period, largely due to improved stock management and end of season product clearance. Our expectation is that gross margin for the full financial year will be approximately 60bps ahead of the prior year.

Store Portfolio

The total number of superstores trading at the period end was 152. We opened two more new stores, in Nottingham and Sheffield, in the final quarter, both replacing existing stores (relocations). This took our total new store openings for the financial year to six, leaving the year-end superstore count at 152. We are currently committed to a further seven new store openings, including one in London, which are likely to take place in the next financial year.

Overall Financial Performance

We anticipate that profit before tax for the 52 weeks ended 2^nd July 2016 will be in line with market expectations.

The group remains strongly cash generative. After payment of ordinary and special dividends, totalling £108m in the last 12 months, our net debt at the year-end is expected to be in the region of £80m.

Commenting on Dunelm's performance, John Browett, Chief Executive, said:

"I am pleased to report another solid quarter of underlying growth, particularly given the more difficult retail trading environment which we believe has seen the Homewares market decline in the quarter. Overall, therefore, we are continuing to increase our share of that market through our focus on delivering everyday value and excellent service for customers.

"The current uncertainty makes the future trajectory of the economy and consumer confidence unclear; however, we are confident that Dunelm, as market leader, will continue to strengthen its position through its low cost operating model, everyday value, consistent cash generation and strong balance sheet.

"We remain focused on delivering key projects across the business and are excited about substantially improving the business for our customers, both in store and online, over the medium term, and continuing to develop Dunelm into a truly national homewares brand."

Ends

For further information please contact:

Dunelm Group plc	0116 2644 439
John Browett, Chief Executive
Keith Down, Chief Financial Officer
MHP Communications	020 3128 8100
Simon Hockridge / Tom Horsman

Announcement of preliminary Results:

Dunelm will make its preliminary results announcement on 14th September 2016 and there will be a presentation for analysts in the offices of UBS, 1 Finsbury Avenue, London EC2M 2PP. Those analysts who wish to attend are requested to contact Isabelle Grainger of MHP Communications on 020 3128 8100 or [e-mail]. A copy of the presentation will be made available on the Dunelm website.

Notes

1.     Like-for-like (LFL) sales represents revenues from stores trading for at least one full financial year prior to 5^th July 2015 and excludes stores with significant change of space in the current or previous financial year.

2.     Quarterly sales and margin analysis:

	52 weeks to 2nd July 2016
	Q1	Q2	H1	Q3	Q4	H2	FY
Total sales	£202.3m	£245.7m	£448.1m	£229.0m	£203.8m	£432.8m	£880.9m
Total sales growth	12.0%	8.8%	10.3%	5.9%	1.8%	3.9%	7.1%
LFL sales growth	5.5%	3.9%	4.6%	1.1%	-0.6%	0.3%	2.5%
Gross margin growth*	+20bps	+30bps	+30bps	+90bps	+80bps	+90bps	+60bps

                  *estimated

	52 weeks to 27th June 2015
	Q1	Q2	H1	Q3	Q4	H2	FY
Total sales	£180.6m	£225.8m	£406.4m	£216.2m	£200.1m	£416.4m	£822.7m
Total sales growth	+17.0%	+11.8%	+14.0%	+10.7%	+12.1%	+11.4%	+12.7%
LFL sales growth	+8.9%	+4.2%	+6.2%	+4.9%	+5.8%	+5.4%	+5.8%
Gross margin growth/decline	+40bps	-30bps	Level	-10bps	-100bps	-60bps	-30bps

3.     Please note that the prior financial year comprised a 53 week period running to 4^th July 2015. Our audited financial statements covered this 53 week period but we use figures for the 52 weeks ending 27^th June 2015 for comparative purposes in the above table.

Notes to Editors

Dunelm is market leader in the £11bn UK Homewares market. The Group currently operates 157 stores, of which 152 are out-of-town superstores and 5 are located on high streets, and an on-line store, to be found at www.dunelm.com.

Dunelm's customer proposition offers industry-leading choice of quality products at keen prices, with high levels of availability and supported by friendly service. Core ranges include many exclusive designs and premium brands such as Dorma and Fogarty, and are supported by a frequently changing series of special buys. The superstore format provides an average of 30,000 sq. ft. of selling space with over 20,000 products across a broad spectrum of categories, extending from the Group's home textiles heritage (bedding, curtains, cushions, quilts and pillows) to a complete Homewares offer including kitchenware and dining, lighting, wall art, furniture and rugs. Dunelm is one of the few national retailers to offer an authoritative selection of curtain fabrics on the roll, and owns a specialist UK facility dedicated to producing made-to-measure curtains.

Dunelm was founded in 1979 as a market stall business, selling ready-made curtains. The first shop was opened in Leicester in 1984 and over the following years the business developed into a successful chain of high street shops before expanding into broader homewares categories following the opening of the first Dunelm superstore in 1991.

Dunelm has been listed on the London Stock Exchange since October 2006 (DNLM.L) and has a current market capitalisation of approximately £1.5bn.

 

END

 

 

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