TIDMDNLM
RNS Number : 6223L
Dunelm Group plc
14 January 2021
14 January 2021
Dunelm Group plc
Second quarter trading update
Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading
homewares retailer, reports on trading for the 13-week period ended
26 December 2020.
Q2 FY21 Q2 FY20 YoY H1 FY21 H1 FY20 YoY
Total sales GBP360.4m GBP322.4m +11.8% GBP719.4m GBP585.0m +23.0%
---------- ---------- --------- ---------- ---------- ---------
Digital
% total
sales(1) 40% 21% +19 %pts 35% 20% +15 %pts
---------- ---------- --------- ---------- ---------- ---------
(1) Digital includes Home Delivery, Click & Collect (Reserve
& Collect before October 2019) and tablet-based selling in
store.
Revenue
Total sales in the quarter were up 11.8%, reflecting continued
very strong growth despite our classification as a non-essential
retailer leading to further store closures during the period.
The majority of the store estate was closed for a four week
period during November, Welsh stores were closed for a 16-day
period from mid-October and many stores were again impacted by
further regional restrictions implemented towards the end of
December.
Throughout the quarter, consumer demand for homewares remained
buoyant, and when our total retail system, including stores, was
fully open, we performed significantly ahead of the market. Our
online home delivery business has more than doubled since the same
period last year as we continue to enhance the digital customer
experience and ramp up our operational capabilities.
Click & Collect has remained popular with customers,
equating to an average of 30% of prior year comparable store sales
during periods of closure.
Gross margin
Gross margin in the quarter improved by 10bps compared to Q2
FY20, as lower discounts earlier in the quarter and sourcing gains
were offset by lower seasonal sell through as a result of store
closures later in the quarter. On a year to date basis, gross
margin improved by 50bps compared to the same period last year.
Our latest view is that gross margin in the second half will be
broadly flat year over year, assuming the current restrictions do
not continue beyond this quarter. We are confident that through
working closely with our supplier partners, we will be able to
navigate the dynamic supply and demand outlook ahead.
Balance sheet
The Group continues to have a very strong balance sheet with net
cash of GBP141m as at 26 December 2020 (H1 FY20: net debt GBP68m)
and access to GBP175m of approved banking facilities which remain
unutilised.
As previously highlighted, the FY20 year-end cash position
benefited from approximately GBP80m of exceptional working capital
inflows related to Covid-19. As at the half-year end, there has
been no reversal of working capital, but we continue to expect that
the GBP80m will unwind before year-end.
Operations update
The Covid-19 pandemic continues to impact our operations.
Currently all 174 stores are closed to customers, with all but five
stores still able to operate a Covid-secure and contactless Click
& Collect service. Home Delivery services continue to operate
as normal.
Our first priority remains the health and safety of our
colleagues and customers. At the beginning of the pandemic, we took
rapid and significant steps to introduce prudent and safe operating
protocols across our operations. We have maintained and monitored
these practices throughout the year to ensure that we continue to
improve and operate to the very highest safety standards.
As previously announced, the Board decided to repay the GBP14.5m
Job Retention Scheme (JRS) monies claimed in the prior financial
year and we are not making further claims. Furthermore, to protect
our most vulnerable colleagues and those not working due to the
current restrictions, we have introduced a company-funded
'furlough' equivalent scheme.
Whilst the supply of goods from Asia has been disrupted by port
operations and global container shortages during the quarter,
typical delays are now only 2-3 weeks. At the half-year end, stock
on hand levels remained slightly below last year and we have higher
goods in transit. We expect to rebuild stock levels during the
second half of the year.
During the quarter we introduced new technology releases for
product information management, delivery promises and a
re-engineered checkout. These new digital capabilities scaled
successfully over our peak period and will allow us to continue to
innovate our proposition at pace.
We also added additional capacity and capability to our flexible
supply chain to respond to increasing demand for home delivery and
we opened a new superstore in Gateshead in mid December, bringing
our store estate to 174 stores.
In December, our store colleagues organised a campaign to
'deliver joy' in the form of personalised Christmas gifts for the
most vulnerable in their local communities. Working in partnership
with our customers and with local primary schools, care homes and
women's refuges, the response was incredible, and over 18,000 gifts
were delivered. This campaign spread organically across social
channels with a reach of over 84 million and 786k shares.
H1 financial performance and outlook
We expect profit before tax (PBT) for the first half of the
financial year to be approximately GBP112m (H1 FY20: GBP83.6m)
which includes the repayment of GBP14.5m JRS monies that were
claimed in Q4 FY20.
The outlook for the second half of FY21 remains uncertain given
that the majority of our stores are currently closed to customers
and there is a lack of clarity on when the restrictions will be
lifted. As a result, we are unable to provide meaningful guidance
for the full year outturn.
During the restricted store trading period, we anticipate that
Click & Collect and Home Delivery services will continue to be
permitted. At this level of restricted operations, the Group will
make a modest weekly loss given our fixed cost base and the
decision not to claim JRS support. Our latest internal planning
scenario assumes a return to more normal trading patterns in the
fourth quarter of our financial year.
Comment from Nick Wilkinson, Dunelm's Chief Executive
Officer:
"Our strong performance continued into the second quarter,
whilst we adapted to the various restrictions and resulting store
closures across our estate. I am immensely grateful for the
engagement and resilience of the Dunelm team who, along with our
suppliers, have demonstrated their outstanding commitment to our
core value of being 'Stronger Together'.
"We enter 2021 with further restrictions and our primary focus
remains the health and wellbeing of our colleagues and customers
across the business.
"Beyond this near term uncertainty, we've never felt more
confident about the future. Our scalable proposition combines an
in-store and digital offer which, with agile technology, we will
continue to develop at pace. As our homes play an increasingly
important role for all of us, we are well placed to build even
closer relationships with our customers and extend our market
leadership."
For further information please contact:
Dunelm Group plc investorrelations@dunelm.com
Nick Wilkinson, Chief Executive Officer
Laura Carr, Chief Financial Officer
MHP Communications 07709 496125
Simon Hockridge / Rachel Mann / Pete Lambie dunelm@mhpc.com
Next scheduled event:
Dunelm expects to release its half year results announcement on
10 February 2021. There will be a virtual presentation for analysts
at 9.30am that morning. Those analysts who wish to attend are
requested to contact Ailsa Prestige of MHP Communications at
ailsa.prestige@mhpc.com. A copy of the presentation will be made
available at https://corporate.dunelm.com.
Quarterly analysis:
52 weeks to 26 June 2021
Q1 Q2 H1 Q3 Q4 H2 FY
---------- ---------- ---------- --- --- --- ---
Total sales GBP359.1m GBP360.4m GBP719.4m
---------- ---------- ---------- --- --- --- ---
Total LFL growth(2) 35.7% 10.8% 22.0%
---------- ---------- ---------- --- --- --- ---
Total Group growth 36.7% 11.8% 23.0%
---------- ---------- ---------- --- --- --- ---
Gross margin improvement +100bps +10bps +50bps
---------- ---------- ---------- --- --- --- ---
52 weeks to 27 June 2020
Q1 Q2 H1 Q3 Q4 H2 FY
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total sales GBP262.6m GBP322.4m GBP585.0m GBP284.4m GBP188.5m GBP472.9m GBP1,057.9m
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total LFL growth(2) 6.4% 5.0% 5.6% -1.3% -29.0% -14.6% -4.5%
---------- ---------- ---------- ---------- ---------- ---------- ------------
Total Group growth 5.8% 6.2% 6.0% 0.0% -28.6% -13.8% -3.9%
---------- ---------- ---------- ---------- ---------- ---------- ------------
Gross margin improvement +130bps +110bps +120bps +130bps -210bps +0bps +70bps
---------- ---------- ---------- ---------- ---------- ---------- ------------
2 Total LFL: LFL stores and online (home delivery). LFL stores
are those stores trading for at least one full financial year prior
to 27 June 2020 without any significant change of space. LFL store
revenues include Click & Collect / Reserve & Collect sales
and home delivery sales in respect of orders placed via in-store
tablets
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.
Dunelm is market leader in the GBP14bn UK homewares market and
active in the GBP12bn UK furniture market. It currently operates
174 stores, of which the majority are out-of-town, and trades
online through dunelm.com . Dunelm employs approximately 10,000
colleagues and sells approximately 50,000 product lines (including
store and online exclusives).
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 by the metre and owns a specialist UK facility dedicated to
producing made-to-measure curtains and blinds.
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 licence agreements.
Dunelm has been listed on the London Stock Exchange since
October 2006 (DNLM.L) and has a current market capitalisation of
approximately GBP2.6bn.
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