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RNS Number : 7501U
Dunelm Group plc
08 April 2021
8 April 2021
Dunelm Group plc
Third 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
27 March 2021.
Q3 FY21 Q3 FY20 YoY YTD FY21 YTD FY20 YoY
Total sales GBP236.6m GBP284.4m -16.8% GBP956.0m GBP869.4m +10.0%
---------- ---------- -------- ---------- ---------- --------
Digital % total
sales(1) 92.4% 22.5% +70%pts 49.4% 21.1% +28%pts
---------- ---------- -------- ---------- ---------- --------
(1) Digital includes home delivery, Click & Collect (Reserve
& Collect before October 2019) and tablet-based selling in
store. Q3 and YTD FY21 digital % impacted by closure of store
estate throughout most of the quarter.
Revenue
Total sales in the quarter of GBP236.6m demonstrated the
resilience of the Dunelm model during a period when the majority of
our store estate was closed to customers. Our digital sales have
more than trebled since the same period last year, enabled by
ongoing enhancements to the customer experience and our operational
capabilities. The strength of our digital proposition, operating
through home delivery and Click & Collect services, allowed us
to cover over 83% of prior year sales.
We began the quarter on 27(th) December 2020 with 80 stores
closed to customers, then increasing tiered restrictions led to
further closures at the start of the new calendar year and the
entire estate of 174 stores was closed by 5(th) January 2021.
We have been permitted to offer Click & Collect services
during the closure period in all stores, with the exception of five
stores in Northern Ireland. Click & Collect has allowed us to
cover approximately 35% of prior year store sales, with our
customer net promoter score of 83% demonstrating the positive
response to our proposition.
Whilst we are pleased with our performance during the quarter
given the restricted trading conditions, we note that the homewares
market(2) has continued to remain strong. As a result of our retail
estate being closed, we have underperformed the market during the
quarter, reflecting that other retailers selling homewares have
been classified as 'essential' and have remained open.
2 Homewares market excluding Dunelm calculated using GfK data
and management estimates.
Gross margin
Gross margin in the quarter increased by 30bps compared to Q3
FY20, mainly due to the reduced scale of our Winter Sale as a
result of store closures. On a year to date basis, gross margin has
improved by 50bps compared to the same period last year.
Assuming stores re-open as expected and there are no further
disruptions this financial year, we expect that gross margin in the
fourth quarter will be ahead of the same period last year given
that the prior year period was disrupted by the store closures in
the first national lockdown.
Balance sheet
As at 27 March 2021, the Group had net cash of GBP40.2m (FY20
Q3: GBP36.4m net debt) and access to GBP175m of approved banking
facilities which remain unutilised.
During the quarter, there was a working capital outflow of
approximately GBP90m, reflecting the reversal of exceptional
inflows from FY20 as previously guided.
We continue to see some minor disruption within our global
supply chain, in line with the broader retail sector. However we
continue to build our inventory levels and are well placed to
service customer demand when our stores re-open. As at 27 March
2021 our inventory balance was GBP193m (FY20 Q3: GBP147m).
Business update
Whilst our operations were significantly impacted by Covid-19
throughout the quarter, our teams remained focused on innovating
and improving our customer proposition as well as supporting the
significant growth in our home delivery and Click & Collect
operations.
We extended our Click & Collect offering with a successful
trial of centrally-fulfilled inventory; this has now been rolled
out to 160 stores and offers increased range and availability. We
have also launched an improved in store tablet based selling tool
ready for the re-opening of our stores.
Reflecting our continued commitment to invest in new store and
refit programmes, our newest store in Newcastle-Under-Lyme and our
refurbished and extended store in Banbury will open next week in
line with the lifting of restrictions. The Newcastle-Under-Lyme
store will feature a 'Make & Mend' department, to encourage
product repair and re-use, as well as an extended home decorating
offer.
Our 13 stores in Scotland opened this week on 5(th) April and we
anticipate that the 156 stores in England and Wales will re-open on
12(th) April. We expect to offer Click & Collect services in
Northern Ireland from 12(th) April but await guidance as to when
those stores can fully re-open.
Outlook
We are anticipating a strong consumer response to the lifting of
the restrictions; our stores are well stocked and ready for
re-opening and our colleagues are excited to welcome customers
back. Given the unusual circumstances, there is still a range of
potential outcomes for FY21. However, assuming that the majority of
our stores open as expected on 12(th) April and there are no
further Covid-19 restrictions this financial year, we expect to end
the year modestly ahead of the top of the current range of analyst
expectations(3) .
(3) Management understand the range of analysts' estimates
(which have been updated since the January trading statement on
14(th) January 2021) for FY21 Profit Before Tax (PBT) is
GBP120m-GBP125m.
Comment from Nick Wilkinson, Dunelm's Chief Executive
Officer:
"In a quarter when we were largely unable to open our stores, it
has been very encouraging to see the strength of our digital
channels which have enabled us to cover over 83% of sales from the
same period last year. This resilient performance is testament to
the commitment and dedication of our teams, who continue to adapt
and innovate the Dunelm customer proposition.
"We are now looking forward to re-opening, with colleagues ready
to welcome back customers through our doors. We have worked hard to
rebuild inventory levels and our stores are well stocked across our
extensive product range.
"The entire Dunelm team is excited to be able to offer our full
proposition once again. With all stores soon to be fully open,
combined with our ever improving digital offering, we look forward
to helping our customers to create a little more joy in their homes
and gardens this summer."
For further information please contact:
Dunelm Group plc investorrelations@dunelm.com
Nick Wilkinson, Chief Executive Officer
Laura Carr, Chief Financial Officer
MHP Communications 07709 496 125
Simon Hockridge / Rachel Mann / Pete Lambie dunelm@mhpc.com
Next scheduled event:
Dunelm expects to release its fourth quarter trading update on
14 July 2021.
Quarterly analysis:
52 weeks to 26 June 2021
Q1 Q2 H1 Q3 Q4 H2 FY
---------- ---------- ---------- ---------- --- --- ---
Total sales GBP359.1m GBP360.4m GBP719.4m GBP236.6m
---------- ---------- ---------- ---------- --- --- ---
Total LFL growth(4) 35.8% 11.3% 22.3% -15.7%
---------- ---------- ---------- ---------- --- --- ---
Total Group growth 36.7% 11.8% 23.0% -16.8%
---------- ---------- ---------- ---------- --- --- ---
Gross margin improvement +100bps +10bps +50bps +30bps
---------- ---------- ---------- ---------- --- --- ---
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 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
---------- ---------- ---------- ---------- ---------- ---------- ------------
4 Total LFL: Excludes new stores and stores which have had a
significant change of space, which have been trading for less than
one full financial year prior to 27 June 2020. Note that Total LFL
growth for FY21 has been restated to take account of sales made via
virtual consultations.
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
175 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 GBP2.7bn.
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