Dunelm Regulatory News (DNLM)

9 July 2015

Dunelm Group plc

Year-end Trading Update

Appointment of Chief Financial Officer

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, provides an update on trading for the final quarter and for the financial year ended on 4th July 2015.

The Group also announces that Keith Down, currently Chief Financial Officer of The Go-Ahead Group plc, will succeed David Stead as CFO in December. David will retire from the Board in early 2016 following a suitable handover period.

Year-end Trading Update

Sales - 52 weeks to 27th June 2015

Sales growth remained strong in the final quarter of the financial year. Total sales grew by 12.1% to £200.1m, with like-for-like ("LFL") sales growth (combining LFL stores and Home Delivery) of 5.8%.

In-store LFL sales grew by 3.5% benefiting from a strong Summer Sale performance, and continued growth in particular from our Made to Measure curtains and blinds service and from our Furniture department. 

Home Delivery sales grew by 43.4% during the quarter and represented 6.8% of sales compared to 5.4% in the prior year. Over the financial year as a whole, Home Delivery sales represented 6.1% of total sales (FY14: 4.4%).

Non-LFL store performance includes sales from four new stores opened in the quarter, taking the total superstore openings in the financial year to twelve, including one relocation (FY14: twelve, including two relocations). We ended the financial year with 148 superstores, compared with our medium-term target of 200.

Sales - 53 weeks to 4th July 2015

Total sales for the statutory financial period of 53 weeks to 4th July 2015 were £835.8m.

Gross Margin Percentage

Gross margin for the final quarter was down by an estimated 70bps on the prior year, impacted by higher than usual clearance activity on both excess furniture stock and end of season lines. As a result, gross margin for the financial year as a whole is expected to be 20bps below the prior year. On an underlying basis, excluding the impact of abnormal clearance activity, gross margin for the year was stable.

Profit before tax

Given the strong trading performance in the final quarter together with increased levels of revenue investment during the year (which will continue into the next financial year), the Board anticipates that profit before tax for the 52 weeks ended 27th June 2015 will be within the range of £119 -123m and for the 53 weeks ended 4th July 2015, within the range of £121-125m.

Strategy Progress

Our pipeline of legally committed new store opportunities stands at eight, of which at least two are expected to open in the first half of the new financial year. The pipeline includes one committed freehold acquisition which is conditional on planning consent.

We are pleased to confirm that our new web platform went live for customers with effect from 1st July 2015.

Financial Position

The Group remains strongly cash generative. After payment of both ordinary dividends and a special distribution during the last twelve months (£183m in total), our cleared net debt balance at 4th July 2015 was £78.2m. Daily average net debt since the special distribution on 20th March 2015 has been £75.4m.

Will Adderley, Chief Executive, commented:

"We have continued to achieve good like for like growth in the final quarter of our financial year, across physical stores as well as our home delivery channel. I would like to thank all colleagues for their efforts in delivering this strong result.

"With a newly strengthened senior team, a recently upgraded website, a sound pipeline of new stores and an ongoing programme of capital and revenue investments in place, I am confident that we will continue to deliver further growth across all our channels going forward."

Appointment of Chief Financial Officer

The Board is pleased to announce that Keith Down will join the Board of Dunelm as Chief Financial Officer in December 2015. Keith will succeed David Stead who will retire after a short handover period, having served on the Board since 2003.

Keith Down is currently Chief Financial Officer of The Go-Ahead Group plc. He qualified as a Chartered Accountant with KPMG, and held a number of senior finance roles in convenience retailing and at Tesco Plc, where he was Commercial Finance Director from 2005 to 2007. He was then appointed Chief Financial Officer of JD Wetherspoon Plc, before joining Go-Ahead in 2011. Keith is a non-executive director at Topps Tiles Plc.

Andy Harrison, Chairman of Dunelm, said:

"Keith brings us a wealth of experience of financial management in retail and other consumer-facing industries. His drive, experience and character will make a significant contribution to our growth, and will provide high quality support to John Browett who, as recently announced, will assume the role of CEO in January 2016 and who has been fully involved in Keith's appointment.

On behalf of the Board, I would also like to thank David Stead for the huge contribution he has made to Dunelm's success since he joined the company in 2003. He has provided excellent leadership and wise counsel to the Board."

Keith Down said:

"I am excited about the challenge of joining Dunelm at the start of this new chapter in its growth, and look forward to working with the Dunelm team."

Ends

For further information, please contact:

Save as disclosed above, there are no disclosures to be made pursuant to LR 9.6.13 in relation to Keith Down.

Announcement of Preliminary Results

Dunelm will make its preliminary results announcement on 10th September 2015 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 Naomi Lane of MHP on 020 3128 8100 or Naomi.lane@mhpc.com. A copy of the presentation will be made available on the Dunelm website.

Notes

1. Like for like sales represent revenues from stores trading for at least one full financial year prior to 28th June 2014 and exclude stores with significant change of space in the current or previous financial year.

2. For analysis purposes, the year to 27th June 2015 represents a 52 week period. The annual report and financial statements for 2014/15 will be presented on a 53 week basis, with 52 week comparatives provided for ease of interpretation.

3. Quarterly sales and margin analysis:

*estimated

Notes to Editors

Dunelm is market leader in the £11bn UK Homewares market. The Group currently operates 154 stores, of which 148 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 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.