Dunelm Regulatory News (DNLM)

7th April 2016

Third Quarter Trading Update

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, reports the following trading update for the third quarter of its current financial year, comprising the 13 week period ended 2nd April 2016, and the year to date.

Revenue

Total revenue for the third quarter grew by 5.9% to £229.0m. Total like-for-like (LFL) growth (combining LFL stores and Home Delivery) increased by 1.1%.

Due to the 53rd week included in the last financial year, the 13 week sales figures include six days less of our Winter Sale year on year. This reduced LFL growth by approximately 4.9% (c£10m) in the third quarter although this was partially offset by earlier Easter timing which contributed approximately 1.0% towards the LFL performance. Adjusting for these calendar impacts, underlying LFL performance was approximately +5.0% for the 13 weeks to 2nd April.

*Reported performance excludes the impact of timing differences described in the paragraph above

Underlying performance

Sales performance in the quarter reflected:

- Strong footfall in LFL stores driven by Winter Sale performance. Improved conversion and higher transaction values year on year also contributed to growth;

- Ongoing store portfolio expansion with one new superstore opened and a number of medium-sized refits completed; and

- Continuing good growth in the on-line business, including a 27.6% increase in home delivery sales.

Gross Margin Percentage

Gross margin for the quarter was approximately 90bps higher than the comparator period, largely due to improved stock management and reduced cost of end of season product clearance, together with the beneficial impact of six days less Winter Sale in the quarter which was worth approximately 30bps. Our expectation is that gross margin for the full financial year will be in the region of 50bps ahead of the prior year.

Store Portfolio

The total number of superstores trading at the period end was 152. We expect to open two more new stores in the remainder of this financial year, and close two existing stores (relocations). This will take 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 five new stores openings which are likely to take place in the next financial year.

Financial Position

On 24 March 2016, the Group paid a special dividend of 31.5p per share, amounting to £63.9m. Reflecting this special dividend, net debt as at 2nd April 2016 was approximately £85m.  

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

"We are pleased with the strong underlying sales growth during the last quarter following the unhelpful, mild conditions experienced in Q2. Overall we continue to increase our Homewares market share.

"We have enjoyed a good Easter, are looking forward to a successful final quarter and are confident of achieving our expectations for the full year.

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

Ends

For further information please contact:

Forthcoming News flow:

Dunelm's next scheduled trading update will be on 7th July 2016 followed by the full year preliminary results announcement on 14th September 2016.

Notes

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

2. Quarterly sales and margin analysis:

*estimated

3. Please note that the prior financial year comprised a 53 week period running to 4th July 2015. Our audited financial statements covered this 53 week period but we use figures for the 52 weeks ending 27th 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 158 stores, of which 152 are out-of-town superstores and 6 are located on high streets, and an on-line store, to be found at www.dunelm.com.

Dunelm's "Simply Value for Money" 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 £1.8bn.