Strong Interim Performance At Dunelm

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, today announces its interim results for the 26 weeks to 30 December 2023. 

Highlights                                           

• Strong sales growth of 4.5%, with total sales increasing to £872m (FY23 H1: £835m)
• Market share increased in both homewares and furniture markets, with a combined gain of 50bps⁴
• Growth in active customers of 4.2%⁵, alongside increased transaction frequency
• Continued digital growth with 36% of total sales generated through digital channels (FY23 H1: 34%)
• Strengthened customer offer drove broad-based growth across our categories and channels
• Extended our total retail system with four new stores opened in H1, taking the total to 183
• Evolved our marketing ecosystem, including the launch of our 'Home of Homes' brand platform
• Over 125,000 Christmas gifts donated to local good causes through the 'Delivering Joy' campaign - double last year
• Continuing to invest for the long term in new store openings, brand marketing and digitalising the business

Financial highlights

• Gross margin up 160bps through promotional discipline while continuing to offer outstanding value
• Maintained tight operational grip on costs, with inflationary impacts partly offset by efficiency gains
• Profit before tax ("PBT") increased by 4.8% to £123m (FY23 H1: £117m)
• Strong free cash flow generation of £91m (FY23 H1: £102m)
• Interim dividend of 16p (FY23 H1: 15p); an increase of 7%
• Special dividend of 35p to return to target leverage range of 0.2× - 0.6× net debt:EBITDA^6,7
• Current trading and outlook
• Pleased with trading so far in the second half
• Customers have been resilient but the consumer outlook remains uncertain
• Continuing to invest to increase our broad appeal while maintaining tight operational grip
• Our PBT expectations for the full year are unchanged and in line with the market⁸

Nick Wilkinson, Chief Executive Officer, commented: 

"In the past six months we have kept our customers front of mind, ensuring our broad offer has value at its core whilst also expanding our ranges, introducing new styles, and improving the experience across our store and digital channels.

"This has been particularly important in a more difficult trading environment and has resulted in another strong sales performance combined with market share gains. Despite ongoing pressures on consumers, we are encouraged by the wide variety of new customers shopping with Dunelm, and existing shoppers also coming back more frequently. Alongside the positive sales performance we have delivered a very strong gross margin, which is testament to our tight operational control and the inherent strength of our business model. 

"As we move towards Spring and customers look to freshen up their homes, our specialist proposition continues to resonate strongly and, in a dynamic retail environment, we are relentlessly focused on evolving and investing in our business to ensure we remain relevant to further increase our broad appeal. We have never been more excited about our future as we build trust in our offer and identity as the Home of Homes." 

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.

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

⁴ GlobalData UK combined homewares and furniture markets, excluding kitchen and bathroom furniture. Market share for the period January 2023 to December 2023 was 7.6%.

⁵ Active customers are those who have shopped with us at least once in a 12-month period. Growth in the 12 months to December 2023 compared to the previous 12 months. Management estimates using Barclays data.

⁶ 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.

⁸ Company compiled average of analysts' expectations for FY24 PBT is £202m, with a range of £199m to £207m.

Source : Dunelm

Image : Shutterstock.com / 282750725 

For all the very latest news and intelligence on the UK's largest home improvement and garden retailers, sign up for the Insight DIY weekly newsletter.