Dunelm Regulatory News (DNLM)

13th January 2016

Dunelm Group plc

TRADING UPDATE

26 weeks to 2nd January 2016

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, reports the following trading update for the 26 week period to 2nd January 2016.

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

"These trading numbers are a reasonable outcome given the unseasonably warm weather. We have had a very strong sale after Christmas and we expect further good progress in the second half.

"I am really pleased to have joined Dunelm. Clearly our proposition remains popular with customers and I look forward to working with the team here in fully delivering the potential of the business over the coming years."

Highlights

Revenue

* Calendar impact

Due to the 53rd week included in the last financial year, the above figures include eight days of our Winter Sale, compared to two days of Winter Sale included in the comparative period. This has boosted LFL growth by approximately £10.0m (equivalent to 4.7% in the quarter and 2.6% over the half year). These impacts will reverse in the next quarter. Therefore, adjusting for this calendar impact, underlying LFL performance was -0.8% for the 13 weeks to 2nd January and +2.0% for the 26 week period.

Underlying performance

Having adjusted for the beneficial calendar impact, sales performance in the quarter reflected:

- Reduced footfall in LFL stores which we attribute to the particularly mild weather, partially compensated by improved conversion and growing transaction values;

- Ongoing store portfolio expansion, with three new superstores opened and one major refit completed;

- Continuing growth in on-line business, including a +23.4% increase in home delivery sales.

Gross Margin

Gross margin percentage growth for the half year is estimated to be +30bps compared with the first half of last financial year. This included the impact of Winter Sale as described above, which is estimated to have depressed margin growth by -20bps in the quarter, and by -10bps over the half year.

Store Portfolio

The total number of superstores trading at the period end was 151. There are seven new stores committed, as at the period end, including two relocations. We expect three of these new stores to open in the remainder of this financial year, taking our total anticipated openings for the financial year to six including the two relocations. This will bring the year-end superstore count to 152. 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 debt of £48.1m (H1 15: net cash £61.4m), reflecting the cash returned to shareholders in H2 15. Daily average net debt across the half year amounted to £47.5m.

Ends

For further information please contact:

Forthcoming Newsflow:

Dunelm will release its interim results on 10th February 2016. 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 Isabelle Grainger of MHP on the above number or at isabelle.grainger@mhpc.com. A copy of the presentation will be made available on the Dunelm website.

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 157 stores, of which 151 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.