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RNS Number : 2904M
Dunelm Group plc
07 January 2019
7 January 2019
Dunelm Group plc
Second Quarter Trading Update
Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading
homewares retailer, reports the following trading update for the
13-week period ended 29 December 2018.
Revenue
Total LFL revenue growth for our second quarter was +9.0%, a
pleasing result which builds upon the positive trading experienced
in the first quarter.
- LFL store revenue increased by +5.7% year on year
- LFL online revenue on Dunelm.com continued to grow strongly in the quarter by +37.9%
- Total multi-channel revenue for the quarter, defined as LFL
online revenue plus Reserve & Collect and tablet-based selling
in-store, represented 16.5% of revenue, an increase of +4.1ppts
year on year.
Total revenue growth of the continuing Dunelm business,
including the benefit of changes to the store portfolio, was
+9.6%.
Total growth at group level was +2.0%, reflecting the closure of
the Worldstores and Kiddicare websites as previously announced.
13 weeks to 29 December 26 weeks to 29 December
2018 2018
Revenue YoY Growth YoY Growth Revenue YoY Growth YoY Growth
(GBPm) (GBPm) (%) (GBPm) (GBPm) (%)
-------- ----------- ----------- -------- ----------- -----------
LFL Stores(1) 246.4 +13.3 +5.7% 444.2 +16.3 +3.8%
-------- ----------- ----------- -------- ----------- -----------
LFL Online - Dunelm.com(2) 36.1 +9.9 +37.9% 62.5 +16.5 +35.8%
-------- ----------- ----------- -------- ----------- -----------
Total LFL 282.5 +23.3 +9.0% 506.8 +32.8 +6.9%
-------- ----------- ----------- -------- ----------- -----------
Non-LFL Stores(3) 21.5 +3.4 - 41.4 +11.0 -
-------- ----------- ----------- -------- ----------- -----------
Total Dunelm 304.0 +26.6 +9.6% 548.2 +43.7 +8.7%
-------- ----------- ----------- -------- ----------- -----------
Non-LFL Online - Worldstores(4) -0.4 -20.6 - 3.6 -37.4 -
-------- ----------- ----------- -------- ----------- -----------
Total Group 303.6 +6.0 +2.0% 551.8 +6.4 +1.2%
-------- ----------- ----------- -------- ----------- -----------
1. LFL Stores - stores trading for at least one full financial
year prior to 1 July 2018 without any significant change of space.
LFL stores revenues include Reserve & Collect sales, and home
delivery sales in respect of orders placed via in-store tablets
2. LFL Online - Dunelm.com (excludes Reserve & Collect
sales, and home delivery sales in respect of orders placed via
in-store tablets)
3. Non-LFL Stores - new stores (including relocations) opened in
the current or previous financial year, and existing stores with
significant change of space in the current or previous financial
year
4. Non-LFL Online - Worldstores.co.uk, Kiddicare.com and
Achica.com (these websites are now closed)
Gross Margin
Following the elimination of lower margin sales from the
Worldstores businesses, gross margin has continued to improve as
expected. We estimate gross margin has increased by approximately
+190bps at the Group level compared with the second quarter last
year. More importantly, we have seen growth in the continuing
Dunelm gross margin of around +120bps, as the dilutive effect of
the Worldstores' lines transferred to Dunelm.com has been more than
offset by FX benefits and improved sourcing.
Business Development
We are now fully focused on delivering our core Dunelm customer
offer, having closed the Worldstores and Kiddicare websites, and we
continue to invest in our new Home of Homes brand campaign. This
integrated marketing campaign across TV, radio and social media
platforms is part of our Customer 1(st) drive to reach new
customers. It is early days, but initial results are
encouraging.
Development of our multichannel propostion remains a priority
and we expect to begin the launch of our new website to customers
in the fourth quarter. This is slightly later than previously
communicated as we evolve and optimise our plans. The new platform
will offer Click & Collect to customers, and allow us to
develop our multichannel offer with greater agility going
forward.
We have not opened or relocated any stores during the quarter,
leaving our superstore footprint at 169. We expect to open one new
store (a relocation) towards the end of the financial year.
Overall Financial Performance and Outlook
We expect PBT in the first half to be approximately GBP70m after
taking an impairment charge of GBP3.8m in relation to the Fogarty
brand(1) (FY18 H1: GBP60.0m before exceptional costs). In the prior
year the financial results included GBP6.9m of trading losses from
the Worldstores businesses.
Given unprecedented levels of uncertainty currently facing
consumers and businesses in the UK, we remain cautious about our
full year outlook. If the homewares market continues to grow at a
similar rate to that experienced in the first half, we expect to
deliver full year PBT modestly ahead of the top of the range of
current analysts' forecasts(2) .
The Group remains highly cash generative; as at 29 December
2018, net debt was GBP73m (FY18 H1: GBP134m) and weekly average net
debt across the first half amounted to GBP81m (FY18 H1:
GBP117m).
Comment from Nick Wilkinson, Dunelm's Chief Executive:
"We are pleased with our overall performance in the first half,
and are helping more customers than ever to create a home they
love. By focusing back on our core business, under one Dunelm
brand, we are improving our trading and financial performance.
"The positive like-for-like revenue growth both in stores and
online, highlights the strength of our customer offer. Our
multichannel proposition is improving all the time, and we are
looking forward to introducing our new web platform in the summer,
using more flexible technology which will allow us to better serve
our customers in a changing retail landscape.
"Despite our strong performance in the year to date, we remain
cautious on the outlook for the second half given the ongoing
uncertainty in the UK economy. However, in the medium term, we see
significant opportunity to grow the business by focusing on our
customers and seizing opportunities in a digital world."
Ends
(1) The main licencee of the Fogarty brand went into
administration during the quarter
(2) Management understands the current range of analyst FY19 PBT
estimates to be GBP108m to GBP112m
For further information please contact:
Dunelm Group plc 0116 264 4439
Nick Wilkinson, Chief Executive Officer
Laura Carr, Chief Financial Officer
MHP Communications 020 3128 8789
Tim Rowntree / Simon Hockridge dunelm@mhpc.com
Next scheduled events:
Dunelm will make its interim results announcement on 13 February
2019. There will be a presentation for analysts that morning in the
offices of UBS, 5 Broadgate, London EC2M 2QS. Those analysts who
wish to attend are requested to contact Peter Lambie of MHP
Communications on 020 3128 8100 or peter.lambie@mhpc.com. A copy of
the presentation will be made available on the Dunelm website.
Notes
1. Quarterly sales and margin analysis (totals include Worldstores):
52 weeks to 29 June 2019
Q1 Q2 H1 Q3 Q4 H2 FY
---------- ---------- ---------- --- --- --- ---
Total sales GBP248.2m GBP303.6m GBP551.8m
---------- ---------- ---------- --- --- --- ---
LFL Stores growth 1.3% 5.7% 3.8%
---------- ---------- ---------- --- --- --- ---
LFL Online growth 33.3% 37.9% 35.8%
---------- ---------- ---------- --- --- --- ---
Total LFL growth 4.2% 9.0% 6.9%
---------- ---------- ---------- --- --- --- ---
Total Dunelm growth** 7.5% 9.6% 8.7%
---------- ---------- ---------- --- --- --- ---
Total Group growth 0.1% 2.0% 1.2%
---------- ---------- ---------- --- --- --- ---
Gross margin growth* +130bps +190bps +160bps
---------- ---------- ---------- --- --- --- ---
52 weeks to 30 June 2018
Q1 Q2 H1 Q3 Q4 H2 FY
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total sales GBP247.9m GBP297.5m GBP545.4m GBP268.2m GBP236.5m GBP504.7m GBP1,050.1m
---------- ---------- ---------- ---------- ---------- ---------- ------------
LFL Stores growth 6.5% 1.1% 3.5% 1.2% -4.6% -1.6% 1.0%
---------- ---------- ---------- ---------- ---------- ---------- ------------
LFL Online growth 46.2% 30.5% 36.8% 35.7% 41.8% 38.7% 37.9%
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total LFL growth 9.3% 3.4% 6.0% 4.6% 0.1% 2.4% 4.2%
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total Dunelm growth 14.3% 9.4% 11.4% 9.0% 3.7% 6.4% 8.9%
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total Group growth 24.8% 13.6% 18.4% 5.1% -1.4% 1.9% 9.9%
---------- ---------- ---------- ---------- ---------- ---------- ------------
Gross margin growth -220bps -155bps -180bps -15bps -50bps -20bps -90bps
---------- ---------- ---------- ---------- ---------- ---------- ------------
* Estimated Group margin growth
** Total Dunelm growth in Q1 has been restated to 7.5% (from
5.8% as previously reported) due to a sales reclassification
between non LFL stores and non LFL online categories
Notes to Editors
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, following
the opening of the first Dunelm superstore in 1991, into broader
homewares categories. Dunelm is now a multi-channel retailer, with
Dunelm.com being launched in 2005 and the acquisition of the
Worldstores Group in 2016 accelerating this further.
Dunelm is market leader in the GBP13bn UK homewares market and
active in the GBP11bn UK furniture market. It currently operates
171 stores, of which 169 are out-of-town superstores and two are
located on high streets, and also trades online through Dunelm.com.
Dunelm employs approximately 10,000 colleagues and sells around
30,000 product lines in store, increasing to around 60,000
online.
Dunelm, "The Home of Homes", offers a customer proposition of
style, value, quality and ease of shopping. From its textiles
heritage, in areas such as bedding, curtains, cushions, quilts and
pillows, Dunelm has broadened its product range to a complete
homewares offer including the likes of kitchenware, dining,
lighting, seasonal, wall art 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 and blinds.
The product range includes many exclusive, own brand designs and
owned premium brands such as Dorma and Fogarty. This is augmented
by a range of other well-known brands and license agreements.
Dunelm has been listed on the London Stock Exchange since
October 2006 (DNLM.L) and has a current market capitalisation of
approximately GBP1.1bn.
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END
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