Dunelm Regulatory News (DNLM)

8 Jul 2008 07:00



8 July 2008

Dunelm Group plc ("Dunelm")

Trading Update

Following the end of its financial year on 28th June 2008, Dunelm, the leading out-of-town specialist homewares retailer, today makes the following comments on trading.

Sales

After seven consecutive quarters of LFL growth, a decline was experienced in the final quarter of the financial year just ended. This was anticipated in light of the strong LFL performance in the equivalent quarter in 2007 (+10.1%), when footfall was encouraged by the poor summer weather.

Based on data published by the British Retail Consortium the Board believes that Dunelm has continued to gain market share through LFL stores.

Gross Margin

As expected, gross margin gains have eased slightly in recent weeks with some key supplier negotiations from 2007 now annualised. Over the year as a whole margin increased by 60 basis points. 

Store Portfolio

With eight superstore openings achieved in the financial year, the Group now trades from 76 superstores and 13 older format high street stores. 

Leases have already been signed for seven units due to open in FY09 or early FY10. Conditions in the retail property market continue to favour strong occupiers and Dunelm is confident that the number of new openings in FY09 will at least equal the figure for FY08.

In addition Dunelm has embarked on a programme to refit older stores on a cyclical basis, typically every 5-7 years. One store was refitted in April at a cost of £0.5m and has outperformed the rest of the estate since then. Further refits are planned at a rate of 5-10 stores per year.

Will Adderley, Chief Executive, commented:

"Whilst many home-related retailers are feeling an impact from negative macro-economic factors, Dunelm is more resilient than most - 'simply value for money' is more appealing than ever at times like this. Our focus remains to keep doing the best job we can for our customers, and our stores are in good shape. 

"As for the coming financial year, we have to assume that the market will continue to get tougher. However we have a very strong balance sheet and healthy cash generation so we remain extremely well placed to exploit market weakness. We will aim to continue outperforming our peers in existing stores as well as taking advantage of increased opportunities to roll out new stores. We are as determined as ever to keep expanding the business and there is still huge potential for us to keep growing our store portfolio." 

Dunelm will make its preliminary results announcement on 11th September 2008. There will be a presentation for analysts at 9.30am in the offices of UBS, 1 Finsbury Avenue, London EC2M 2PP. Those analysts who wish to attend are requested to contact Natasha Jobling of Hogarth Partnership on 020 7357 9477 or njobling@hogarthpr.co.uk

ENDS

For further information please contact:

Notes to Editors 

Dunelm is amongst the top 10 retailers operating in the £12bn UK homewares market. The Group has 89 stores, branded Dunelm Mill, of which 76 are out-of-town superstores. Dunelm employs over 5,500 full and part time staff, the vast majority of whom work in the stores.

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 in the Midlands specialising in soft furnishings. The first Dunelm superstore was opened in 1991, leading to the Company's move into the broader homewares market.

The superstores provide an average of 28,000 sq ft of selling space and offer an extensive range of approximately 20,000 products across a broad spectrum of categories, including bedding, curtains, gifts and seasonal items, cushions, bathroom products, kitchenware, quilts, pillows and rugs. Dunelm also specialises in offering a wide range of fabrics, made to measure curtains and a frequently changing series of special buys. The directors are passionate about ensuring that all ranges live up to Dunelm's philosophy of offering customers "Simply Value for Money".

Dunelm also has an on-line store (www.dunelm-mill.com) with over 9,000 products available.

Dunelm is listed on the London Stock Exchange (DNLM.L).