Dunelm Posts Half-Year Sales Increase

• Good performance and strategic progress in a challenging environment

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, today announces its interim results for the 26 weeks to 28 December 2024. 

Highlights                                           

• Good performance in a challenging environment, again underpinned by the quality of our customer proposition and advantaged business model
  
  
• Sales growth of 2.4%, driven by volume, with total sales increasing to £894m (FY24 H1: £872m)
  
  
• Another strong digital performance, with 39% of total sales generated through digital channels (FY24 H1: 36%)
  
  
• Market share increased to 7.8%, up 30bps on a calendar year basis⁴
  
• Growth in active customers of 4.3% in 2024⁵
  
  
• Further progress with our strategic priorities: elevate our product offer; connect with more customers; and harness our operational capabilities
  
  
• Continued to improve our digital proposition, whilst expanding our store portfolio to inner London, and also Ireland via our Home Focus acquisition
  
  
• Over 270,000 gifts donated to local communities through our record-breaking 'Delivering Joy' campaign, more than double last year

Financial highlights

• Delivered a strong gross margin of 52.8% (FY24 H1: 52.7%), up 10bps, whilst maintaining our value proposition
  
  
• Tight operational grip and productivity initiatives partly offsetting inflationary impacts and investment
  
  
• Profit before tax ("PBT") up 0.2% to £123m (FY24 H1: £123m)
  
  
• Diluted earnings per share ("EPS") up 0.9% to 45.0p (FY24 H1: 44.6p)
  
  
• Free cash flow of £169m (FY24 H1: £91m), including £88m timing benefit²
  
  
• Strong cash generation and confidence in future plans driving shareholder returns:
  ·    Interim dividend of 16.5p (FY24 H1: 16.0p); an increase of 3.1%
  ·    Special dividend of 35.0p to return to target leverage range of 0.2× - 0.6× net debt :           annualised EBITDA^6,7

Current trading and outlook

• We remain confident in our advantaged business model and are progressing with our strategic plans, whilst staying mindful of a challenging sector backdrop and a cautious consumer
  
  
• We are encouraged by early trading in the second half
  
  
• Our PBT expectations for the full year are unchanged and in line with consensus⁸

Nick Wilkinson, Chief Executive Officer, commented: 

"Our performance over the first half reflects the growing attraction of the Dunelm offer for a wide range of customers, and the quality and resilience of our business model. Amidst a challenging backdrop for retail, those attributes have helped us deliver increased sales, a strong gross margin, and both customer and market share growth. 

"We have also pressed ahead with our strategy. Whether our customers prefer maximalist prints or neutral plains, the elevation of our product is apparent through the diverse range of styles on offer for all tastes, with quality once again endorsed through the awarding of a Royal Warrant to our Dorma brand. Our thriving total retail system is connecting that product with more customers, and we saw further growth in our increasingly personalised digital channels, as well as some exciting firsts for our store portfolio; we arrived in inner London at Westfield, acquired 13 stores in Ireland, and we will open our 200th store in the second half. 

"As ever, whilst pleased with our results, we are eager to move faster and with greater purpose. Customers love Dunelm, but we can grow to become a destination for more customers, across more categories, more of the time. With our dedicated colleagues, who have shown incredible adaptability in a difficult trading environment, this gives us a renewed confidence in unlocking our full potential as The Home of Homes."

Dunelm has also announced that CEO Nick Wilkinson is to retire from the business. Read more here.

1 Digital includes home delivery, Click & Collect and tablet-based sales in store

2 Free cash flow is defined as net cash generated from operating activities less capex (net of disposals), net interest paid (including leases) and loan transaction costs, and repayment of principal element of lease liabilities. A reconciliation of operating profit to free cash flow is included in the CFO review. Free cash flow in the half included timing benefit of £88m due to a payment in transit which cleared on the first working day of H2

3 Excluding lease liabilities. Full definition provided in the table of alternative performance measures

⁴ GlobalData UK combined homewares and furniture markets, excluding kitchen cabinetry and bathroom furniture, for the period January 2024 to December 2024. Prior year comparative restated from 7.6% to 7.5%

⁵ Year-on-year growth in unique active customers who have transacted at least once in the 12 months to December 2024. Management estimates using Barclays data

⁶ EBITDA defined as operating profit plus depreciation and amortisation of property, plant and equipment and intangible assets plus loss on disposal and impairment of property, plant and equipment and intangible assets plus depreciation on right-of-use assets

⁷ Within target range at the end of H1 after interim and special dividend commitments and excluding £88m timing benefit due to a payment in transit which cleared on the first working day of H2

⁸ Company compiled average of analysts' expectations for FY25 PBT is £209m, with a range of £204m to £214m

Source : Dunelm

Image : PaulMaguire / iStock / 1137820857

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