Dunelm Regulatory News (DNLM)

8th January 2015

Dunelm Group plc

TRADING UPDATE

26 weeks to 27th December 2014

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, issues the following trading update in respect of the 26 week period to 27th December 2014.

Revenue

Group revenue for the period was:

Total revenue for the half year grew by 14.0%, as a result of:

- Good performance in LFL stores (3.5% LFL growth excluding on-line home delivery)

- Continuing store portfolio expansion, with six new superstore openings (one of which was a relocation of a high street store)

- Significant growth in on-line business, including over 70% increase in home delivery sales

The departments making the largest contribution to growth were:

- Furniture, which increased by almost 60% to exceed £20m sales in the period

- Made to measure curtains and blinds, driven in part by the increased geographic reach of our Dunelm At Home service

In addition, growth in the half year reflected weak sales in the early part of the comparable period last year (due to the July 2013 heatwave).

Gross Margin

Gross margin percentage for the half year is estimated to be at the same level as the first half of last financial year. Following margin growth in the first quarter, we have seen this reverse in the second quarter as foreign exchange benefits have dropped away.

Operating Costs and Profit Before Tax

As planned, operating expenditure has risen in key functions to support our strategic initiatives aimed at further growth in revenues and market share. Specifically, this includes: new stores operating costs; online home delivery fulfilment costs; Dunelm At Home staffing investment; additional marketing investment; and development of capabilities in support functions such as IT and Merchandising.

In addition, our increased commitment to furniture has driven a significant uplift in our logistics costs. This includes costs related to external storage locations away from our Stoke distribution centre to support increased furniture volumes.

Taking into account these factors, we anticipate that operating expenses for the half year will amount to approximately £137m and profit before tax will be in the region of £68m.

Store Numbers

The total number of superstores trading at the period end was 142. There were eleven new stores committed as at the period end, including one relocation. We expect six of these new stores will open in the remainder of this financial year, taking our total anticipated openings for the financial year to 12, and bringing the year-end superstore count to 148. Our medium term target remains to operate from around 200 superstores across the UK.

Financial Position

The Group remains strongly cash generative with closing net cleared funds at bank of £61.4m. Daily average cleared funds across the half year amounted to £49.4m.

Commenting on Dunelm's performance in the period, Will Adderley, Chief Executive, said:

"I am pleased with our trading through our first half. Whilst we were up against weak comparatives in the first quarter, this was not the case in the second quarter so like for like growth of over 4% in that period is a strong result - thanks to the hard work of our teams in stores and throughout the business.

"My priority going forward is to achieve growth consistently from each of our channels, including our core superstore format. We are excited by the opportunities available to us both from stores and online and we will continue to make the capital and revenue investments necessary to seize them."

For further information please contact:

Forthcoming Newsflow.

Dunelm will release its interim results on 11th February 2015. There will be a presentation for analysts at 9.30am at 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 the above number or at 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. Quarterly sales and margin analysis:

*estimated

Notes to Editors

Dunelm is market leader in the £11bn UK homewares market. The Group currently operates 148 stores, of which 142 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.