Dunelm LFL sales rise by 0.2% in Q2

Dunelm has reported on Q2 trading, covering the 13 weeks ended 31/12/16.

Total revenue for the second quarter rose by 6.6% to £261.9m. Total revenue, excluding the acquisition of Worldstores, for Q2, rose by 3.3% to £253.8m. Total LFL growth (combining LFL stores and Home Delivery) increased by 0.2%. Due to the change in the accounting period end date, the figures include six days of the Winter Sale, compared to eight days in the comparative period last year. Without this impact LFL growth would have been approx. £4.0m higher (equivalent to 1.7% in the quarter and 0.9% over the half year). We expect this to reverse in the second half of the year.

As expected, we saw an improved Q2 with seasonal product in particular performing well. The homewares market has continued to decline but we believe that we are continuing to outperform the market as a whole. We also continue to see good growth in the online business, including a 21.7% increase in home delivery sales for the quarter.

*Worldstores figures represent the five week period post acquisition on 28th November 2016, until 31st December 2016

Gross Margin
Gross margin percentage for the half year is estimated to be broadly flat compared with the first half of last financial year. In the quarter, we started to see some impact from adverse currency conditions, affecting goods sourced directly or from third parties, and expect this to increase as we move into the second half of the year. Overall, we expect gross margin to remain broadly flat in the second half, compared to the same period last year.

Store Portfolio
We opened five new stores in the period leaving our superstore footprint at 157 stores. We are now legally committed to a further seven new stores of which five are due to open in the current financial year. We have completed three store refits within the year to date and have at least a further nine planned for the remainder of the financial year.

Worldstores
The development of our online business is a key strategic objective and we firmly believe our acquisition of Worldstores, which completed on 28^th  November, is an opportunity to accelerate the growth of our internet operation, more than doubling its size, and enhancing our position as the destination homewares retailer in the UK, both online and offline.

Since the acquisition, the business has generated £8.1m of revenue. We have invested around £6.2m in working capital and paid £1m of the purchase consideration. The additional £7.5m consideration is due at the end of January 2017. The business is performing in line with our expectations and we will give a further update in our interim report.

Commenting on Dunelm's performance, John Browett, Chief Executive, said:
"Following a difficult first quarter we have seen an improvement in performance both in our stores and online. It was encouraging to see customers respond well to our seasonal product lines, especially our new Christmas offer. We have continued to outperform the homewares market in what is a challenging and volatile retail environment.

"We were pleased to complete the acquisition of Worldstores in the quarter and remain excited by the opportunity it gives us to accelerate the growth of our online proposition.

"We continue to focus on and invest in our key strategic initiatives, which will improve the business over the medium term, whilst ensuring we maintain our unique offer of tremendous value for money, combined with an unrivalled range and great service."

Image: Imran's Photography/Shutterstock.com

Source : Dunelm