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12 Apr 2018 07:00
12 April 2018
Dunelm Group plc
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 31 March 2018.
Revenue
Total revenue for the third quarter rose by 5.1% to £268.2m. Total like-for-like (LFL) revenue grew by 4.6%, continuing the growth trend seen in the first half. Organic online growth through Dunelm.com has also remained strong, at 35.7% in the quarter. The year-on-year reduction in non-LFL online sales partially reflects the disposal of the Achica business.
| 13 weeks to 31 March 2018 | 39 weeks to 31 March 2018 | ||||
| Revenue (£m) | YoY Growth (£m) | YoY Growth (%) | Revenue (£m) | YoY Growth (£m) | YoY Growth (%) |
LFL Stores1 | 202.7 | 2.5 | 1.2% | 626.0 | 16.8 | 2.8% |
LFL Online2 | 29.4 | 7.7 | 35.7% | 75.5 | 20.1 | 36.4% |
Total LFL | 232.2 | 10.2 | 4.6% | 701.5 | 37.0 | 5.6% |
Non-LFL Stores3 | 21.0 | 10.6 |
| 56.1 | 35.6 |
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Non-LFL Online4 | 15.0 | (7.8) |
| 55.9 | 25.3 |
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Total Dunelm Group | 268.2 | 13.0 | 5.1% | 813.6 | 97.9 | 13.7% |
1. LFL Stores - stores trading for at least one full financial year prior to 2 July 2017 without any significant change of space
2. LFL Online - Dunelm.com
3. Non-LFL Stores - new stores opened within the current financial year or prior financial year
4. Non-LFL Online - Worldstores.co.uk, Kiddicare.com and Achica.com. Note, the Group completed the disposal of the Achica business on 15 February 2018
Gross Margin
In Q3 our gross margin was approximately 15bps lower than the comparable period last year. Core Dunelm margins were down 95bps, reflecting the reversal of a one-off phasing benefit from retail price increases last year and a continued higher proportion of end of season sales. This was largely offset by improved Worldstores product margins year on year, which will continue to benefit the fourth quarter.
In the final quarter, we expect our gross margin to improve significantly year on year, largely reflecting the adverse impact of end of season sales in Q4 last year that we do not expect to repeat this year. We retain our guidance that our H2 margins will be broadly in line with our H1 margins.
Store Portfolio
Our superstore footprint remains at 169 stores. No further stores were opened in the quarter, or are currently expected to open in the remainder of this financial year.
Financial Position
As at 31 March 2018, net debt was approximately £123.8m and daily average net debt across the quarter was £109.4m.
During the quarter, we agreed with our existing syndicate partner banks to amend and extend our Revolving Credit Facility for a further three years to March 2023, with two further one-year extension options. We have increased the maximum facility size by £15m to £165m. The terms, fees and covenants remain the same as the prior agreement. We have retained an accordion facility of £75m, although this remains uncommitted at this stage.
Commenting on Dunelm's performance, Nick Wilkinson, Chief Executive, said:
"We've seen a good sales performance over the quarter, with like-for-like sales of 1.2% in stores and 35.7% online, despite a challenging consumer backdrop. Our continuing market share gains in the Homewares category reflect the underlying strength of our brand and operating model, and enhance our position as market leader. As a result, our expectations for the full year remain unchanged.
"Having joined in February I am increasingly excited about the opportunities available to Dunelm to develop and grow a truly multichannel proposition. I would like to thank my new colleagues for the work they have done to deliver significant improvements to customer satisfaction across all of our channels, as well as driving good sales performance."
Ends
For further information please contact:
Dunelm Group plc | 0116 2644439 |
Nick Wilkinson, Chief Executive Keith Down, Chief Financial Officer
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MHP Communications | 020 3128 8789 |
Tim Rowntree / Simon Hockridge | dunelm@mhpc.com |
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Next scheduled events:
Dunelm's Q4 trading update will be on 12 July 2018. The full year results announcement will be on 12 September 2018.
Notes
1. Quarterly sales and margin analysis (prior year restated to include Worldstores):
| 52 weeks to 30 June 2018 | ||||||
| Q1 | Q2 | H1 | Q3 | Q4 | H2 | FY |
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Total sales | £247.9m | £297.5m | £545.4m | £268.2m |
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LFL Stores growth | 6.5% | 1.1% | 3.5% | 1.2% |
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LFL Online growth | 46.2% | 30.5% | 36.8% | 35.7% |
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Total LFL growth | 9.3% | 3.4% | 6.0% | 4.6% |
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Total sales growth | 24.8% | 13.6% | 18.4% | 5.1% |
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Gross margin growth* | -220bps | -155bps | -180bps | -15bps |
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| 52 weeks to 1 July 2017 | ||||||
| Q1 | Q2 | H1 | Q3 | Q4 | H2 | FY |
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Total sales | £198.7m | £261.9m | £460.5m | £255.1m | £240.0m | £495.1m | £955.6m |
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LFL Stores growth | -5.1% | -1.4% | -3.1% | -4.3% | 1.3% | -1.8% | -2.4% |
LFL Online growth | 17.9% | 21.7% | 20.1% | 21.0% | 32.1% | 26.2% | 23.5% |
Total LFL growth | -3.8% | 0.2% | -1.6% | -2.2% | 3.8% | 0.6% | -0.5% |
Total sales growth | -1.8% | 6.6% | 2.8% | 11.4% | 17.7% | 14.4% | 8.5% |
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Gross margin growth* | 0bps | -60ps | -35bps | -75bps | -195bps | -130bps | -90bps |
Gross margin growth** | 0bps | +10ps | +5bps | +75bps | -75bps | 0bps | 0bps |
*estimated group margin growth
**estimated underlying/pre-acquisition margin growth
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 accelerating this yet further. Today, around 20% of sales are generated online.
Dunelm is market leader in the £12bn UK homewares market and active in the £11bn UK furniture market. It currently operates 172 stores, of which 169 are out-of-town superstores and 3 are located on high streets, and online stores, the largest of which can be found at www.dunelm.com, www.worldstores.co.uk and www.kiddicare.com. Dunelm employs approximately 10,000 colleagues and sells around 30,000 product lines in store, increasing to around 300,000 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 rapidly broadened its product offering 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.
The product range includes many, exclusive, own brand designs and premium brands such as Dorma, Fogarty and Kiddicare. 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 £1.1bn.
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