Interim Management Statement

RNS Number : 9130D

Dunelm Group plc

03 April 2014

 



3^rd April 2014

Interim Management Statement

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, provides the following update on trading for the third quarter of its current financial year, comprising the 13 week period ended 29^th March 2014.

Revenue

	13 weeks to 29th March 2014	13 weeks to 30th March 2013	39 weeks to 29th March 2014	39 weeks to 30th March 2013
Total sales value	£195.4m	£177.8m	£551.7m	£517.9m
Total sales growth	+9.9%	+15.4%	+6.5%	+14.1%
LFL sales growth1	+5.0%	+5.2%	+1.0%	+3.2%

Total revenue for the third quarter grew by 9.9% after four store openings in the period. These included one relocation of an existing under-sized superstore and one superstore which replaces two high street shops that have subsequently closed. This takes the total superstore openings in the financial year to date to 10.

Growth in like for like sales for the quarter was 5.0%, reflecting the absence of any snow disruption this year as well as ongoing investments which have strengthened our customer proposition and driven sales.  These include ongoing development in multi-channel, the further roll-out of our Dunelm At Home proposition, enhanced customer service training, continuation of TV advertising and an expanded spring catalogue.

Gross Margin Percentage

Gross margin for the quarter has continued its positive trend with an improvement of approximately 100 basis points compared with the prior year. A key driver of margin improvement is direct sourcing activity, which we continue to support with increased infrastructure. In line with previous guidance, we anticipate that year on year margin growth will continue over the remainder of the financial year.

Strategy Progress

Our pipeline of legally committed new store opportunities stands at eight, of which two are anticipated to open prior to the financial year-end. This will take the number of store openings for the full financial year to 12² and our superstore portfolio to 136 stores at the year-end, compared with our medium term target to operate from 200 UK superstores.

We have seen continued progress in our multi-channel business with pleasing revenue growth during the period as we have capitalised on our improved delivery proposition since opening a new fulfilment operation last autumn, as well as the expansion of our range of exclusive home-delivery products. Our next key development will be to transition our website to a new software platform; we expect to complete this project in summer 2014 as previously indicated.

Financial Position

The Group remains strongly cash generative with closing net cleared funds at bank of £57.3m. Daily average net cleared funds over the period since our return of capital on 11^th October 2013 were £47.7m.

Commenting on Dunelm's performance, Nick Wharton, Chief Executive, said:

"Dunelm has again delivered a period of solid progress.  This reflects, in part, our willingness to invest to underpin the longer-term growth of the business - including in increased advertising to build brand awareness, further enhancing our home delivery proposition, and expanding our in-home consultation service.  These investments will continue, increasing our operating cost ratio whilst benefiting sales and further strengthening our market leading proposition.

"With clear opportunities to develop further our in-store offer, to expand our store portfolio and to benefit from our exciting multi-channel and customer service initiatives, the Board remains confident in the growth prospects for the business."  

For further information please contact:

Dunelm Group plc	0116 2644 356
Nick Wharton, Chief Executive
David Stead, Finance Director
MHP Communications	020 3128 8100
John Olsen / Simon Hockridge

Forthcoming Newsflow.

Dunelm's next scheduled trading update will be on 8^th July 2014 followed by the full year preliminary results announcement on 11^th September 2014.

Notes

1.   Like for like sales represent revenues from stores trading for at least one full financial year prior to 29^th June 2013 and exclude stores with significant change of space in the current or previous financial year. 

2.   The net increase in superstore numbers over the financial year is expected to be 10, as the expected total of 12 openings includes two superstore relocations and one superstore opening to replace two high street shops.

3.   Quarterly sales and margin analysis:

	Year to 28th June 2014
	Q1	Q2	H1	Q3
Total sales	£154.3m	£202.0m	£356.3m	£195.4m
Total sales growth	+1.7%	+7.3%	+4.8%	+9.9%
LFL sales growth	-5.3%	+2.9%	-0.9%	+5.0%
Gross margin growth	+70bps	+120bps	+90bps	+100bps*

        ^*estimated

	Year to 29th June 2013
	Q1	Q2	H1	Q3	Q4	H2	FY
Total sales	£151.8m	£188.3m	£340.1m	£177.8m	£159.3m	£337.1m	£677.2m
Total sales growth	+13.8%	+13.1%	+13.4%	+15.4%	+6.4%	+11.0%	+12.2%
LFL sales growth/(decline)	+3.0%	+1.6%	+2.2%	+5.2%	-2.8%	+1.2%	+1.7%
Gross margin growth	+40bps	+20bps	+30bps	+20bps	+80bps	+50bps	+40bps

Notes to Editors

Dunelm is market leader in the £11bn UK homewares market. The Group currently operates 141 stores, of which 134 are out-of-town superstores and seven are located on high streets, and an on-line store, to be found at www.dunelm.com

Dunelm's proposition offers industry-leading choice of quality products at keen prices, with high levels of availability and supported by friendly service. Core ranges include many exclusive designs and premium brands such as Dorma, and are supported by a frequently changing series of special buys. The superstore format provides an average of 30,000 sq ft of selling space with over 20,000 products across a broad spectrum of categories, extending from the Group's home textiles heritage (bedding, curtains, cushions, quilts and pillows) to a complete homewares offer including kitchenware and dining, lighting, wall art, furniture and rugs. Dunelm is one of the few national retailers to offer an authoritative selection of curtain fabrics on the roll, and owns a specialist UK facility dedicated to producing made to measure curtains.

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 into broader homewares categories following the opening of the first Dunelm superstore in 1991.

Dunelm has been listed on the London Stock Exchange since October 2006 (DNLM.L) and has a current market capitalisation of approximately £1.9bn.

 

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