Dunelm Group plc First Quarter Trading Update (6627D)

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RNS Number : 6627D

Dunelm Group plc

11 October 2018

11 October 2018

Dunelm Group plc

First Quarter Trading Update

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, reports the following trading update for the first quarter of its current financial year, comprising the 13-week period ended 29 September 2018.

Revenue

For the first quarter of our financial year we report total LFL revenue growth of +4.2%, a pleasing result in light of the strong prior year comparative (+9.3%).

With our customers increasingly interacting and transacting with us across multiple channels, we regard total like-for-like (LFL) as a more meaningful performance measure than individual channel LFL. However, in the interests of transparency we provide the following channel analysis:

- LFL store revenues increased by +1.3% year on year. Excluding a 1.7ppts year on year benefit of tablet-based selling in-store for home delivery, underlying LFL performance would have been -0.4%.

- LFL online revenues on Dunelm.com continued to grow strongly in the quarter by +33.3% (including tablet-based selling in-store, growth would have been +50.8%).

- Total multi-channel revenue for the quarter, defined as online revenue plus Reserve & Collect and tablet-based selling in-store, represented 14.8% of continuing Dunelm revenue, an increase of 3.9ppts year on year.

Including the benefit of changes to the store portfolio, total growth of continuing Dunelm business was +5.8%.

Total growth at group level was +0.1%, reflecting our withdrawal from the Worldstores businesses as previously announced.

 
                                        13 weeks to 29 September 
                                                   2018 
                                    Revenue   YoY Growth   YoY Growth 
                                     (GBPm)     (GBPm)         (%) 
                                   --------  -----------  ----------- 
 LFL Stores(1)                       201.6       +2.5        +1.3% 
                                   --------  -----------  ----------- 
 LFL Online - Dunelm.com(2)          26.5        +6.6        +33.3% 
                                   --------  -----------  ----------- 
 Total LFL                           228.1       +9.1        +4.2% 
                                   --------  -----------  ----------- 
 Non-LFL Stores(3)                   16.1        +4.2        +35.2% 
                                   --------  -----------  ----------- 
 Total continuing Dunelm             244.2      +13.3        +5.8% 
                                   --------  -----------  ----------- 
 Non-LFL Online - Worldstores(4)      4.0       -13.0        -76.7% 
                                   --------  -----------  ----------- 
 Total Group                         248.2       +0.3        +0.1% 
                                   --------  -----------  ----------- 
 

1. LFL Stores - stores trading for at least one full financial year prior to 2 July 2018 without any significant change of space. LFL stores revenues include Reserve & Collect sales, and home delivery sales in respect of orders placed via in-store tablets

2. LFL Online - Dunelm.com (excludes Reserve & Collect sales, and home delivery sales in respect of orders placed via in-store tablets)

3. Non-LFL Stores - new stores (including relocations) opened in the current or previous financial year, and existing stores with significant change of space in the current or previous financial year

4. Non-LFL Online - Worldstores.co.uk, Kiddicare.com and Achica.com (these websites are now closed)

Gross Margin

As expected following the elimination of lower margin sales from Worldstores businesses, gross margin was stronger with a +130bps increase at Group level compared with the first quarter last year. More importantly, we achieved growth in continuing Dunelm gross margin of +50bps, as the dilutive effect of Worldstores' lines transferred to Dunelm.com was more than offset by FX benefits and improved sourcing.

Business Development

We have now closed the Worldstores and Kiddicare websites and have completed the transfer of approximately 20,000 lines onto Dunelm.com.

We remain on track to launch our new Dunelm.com web platform in Q3 of this financial year which will allow us to launch Click & Collect and subsequent developments (such as improved delivery options) with much greater agility going forward.

There was one new superstore opening in the first quarter (a relocation), leaving our superstore footprint at 169 stores. At this point we are legally committed to one new store that is due to open towards the end of the financial year (which is also a relocation), and we remain in discussion on further new store opportunities.

During the quarter we launched a new brand campaign as part of our drive to reach new customers. This is an integrated marketing campaign across TV, radio and social media platforms. The campaign also includes an ad-funded TV programme, Back to Mine, in partnership with ITV.

Financial Position

As at 29 September 2018, net debt was approximately GBP109m (FY18: GBP130m). Daily average net debt across the period amounted to GBP104m (FY18: GBP115m).

Comment from Nick Wilkinson, Dunelm's Chief Executive:

"We delivered a good trading performance in the first quarter. Our positive LFL growth highlights the strength of our customer offer which we are continually working hard to improve as we focus on our core business again under one brand, with one platform and one supply chain.

"We continue to improve the multichannel experience for our customers and our stores play a vital role in this. I am pleased at the progress we are making with tablet-based selling in store to offer our full product range to all our customers.

"Whilst we are cautious about the months ahead due to the level of market and customer uncertainty, I see plenty of opportunity over the medium term as we continue our journey to become the leading multichannel retailer in our sector, helping our customers create homes they love."

Ends

For further information please contact:

 
 Dunelm Group plc                             0116 2644439 
 Nick Wilkinson, Chief Executive 
  David Stead, Chief Financial Officer 
 MHP Communications                           020 3128 8570 
 Tim Rowntree / Simon Hockridge / Alistair    [e-mail] 
  de Kare-Silver 
 

Next scheduled events:

The Q2 trading update will be on 16 January 2019. The half year results announcement will be on 20 February 2019.

Notes

   1.     Quarterly sales and margin analysis (totals include Worldstores): 
 
                                52 weeks to 29 June 2019 
                            Q1       Q2   H1   Q3   Q4   H2   FY 
                        ----------  ---  ---  ---  ---  ---  --- 
 Total sales             GBP248.2m 
                        ----------  ---  ---  ---  ---  ---  --- 
 
 LFL Stores growth         1.3% 
                        ----------  ---  ---  ---  ---  ---  --- 
 LFL Online growth         33.3% 
                        ----------  ---  ---  ---  ---  ---  --- 
 Total LFL growth          4.2% 
                        ----------  ---  ---  ---  ---  ---  --- 
 Total Dunelm growth       5.8% 
                        ----------  ---  ---  ---  ---  ---  --- 
 Total Group growth        0.1% 
                        ----------  ---  ---  ---  ---  ---  --- 
 
 Gross margin growth*     +130bps 
                        ----------  ---  ---  ---  ---  ---  --- 
 
 
                                                     52 weeks to 30 June 2018 
                           Q1          Q2          H1          Q3          Q4          H2           FY 
                       ----------  ----------  ----------  ----------  ----------  ----------  ------------ 
 Total sales            GBP247.9m   GBP297.5m   GBP545.4m   GBP268.2m   GBP236.5m   GBP504.7m   GBP1,050.1m 
                       ----------  ----------  ----------  ----------  ----------  ----------  ------------ 
 
 LFL Stores growth        6.5%        1.1%        3.5%        1.2%        -4.6%       -1.6%        1.0% 
                       ----------  ----------  ----------  ----------  ----------  ----------  ------------ 
 LFL Online growth        46.2%       30.5%       36.8%       35.7%       41.8%       38.7%        37.9% 
                       ----------  ----------  ----------  ----------  ----------  ----------  ------------ 
 Total LFL growth         9.3%        3.4%        6.0%        4.6%        0.1%        2.4%         4.2% 
                       ----------  ----------  ----------  ----------  ----------  ----------  ------------ 
 Total Dunelm growth      14.3%       9.4%        11.4%       9.0%        3.7%        6.4%         8.9% 
                       ----------  ----------  ----------  ----------  ----------  ----------  ------------ 
 Total Group growth       24.8%       13.6%       18.4%       5.1%        -1.4%       1.9%         9.9% 
                       ----------  ----------  ----------  ----------  ----------  ----------  ------------ 
 
 Gross margin growth     -220bps     -155bps     -180bps     -15bps      -50bps      -20bps       -90bps 
                       ----------  ----------  ----------  ----------  ----------  ----------  ------------ 
 

*estimated Group 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 in 2016 accelerating this further.

Dunelm is market leader in the GBP13bn UK homewares market and active in the GBP11bn UK furniture market. It currently operates 172 stores, of which 169 are out-of-town superstores and 3 are located on high streets, and also trades online through www.dunelm.com. Dunelm employs approximately 10,000 colleagues and sells around 30,000 product lines in store, increasing to around 60,000 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 broadened its product range 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 owned premium brands such as Dorma and Fogarty. 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 GBP1.1bn.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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October 11, 2018 02:00 ET (06:00 GMT)