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Dunelm reports strong growth in Q3

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Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, reports the following trading update for the third quarter of its current financial year, comprising the 13 week period ended 2nd April 2016, and the year to date.

Revenue
Total revenue for the third quarter grew by 5.9% to £229.0m. Total like-for-like (LFL) growth (combining LFL stores and Home Delivery) increased by 1.1%.

Due to the 53rd week included in the last financial year, the 13 week sales figures include six days less of our Winter Sale year on year. This reduced LFL growth by approximately 4.9% (c£10m) in the third quarter although this was partially offset by earlier Easter timing which contributed approximately 1.0% towards the LFL performance. Adjusting for these calendar impacts, underlying LFL performance was approximately +5.0% for the 13 weeks to 2nd April. 

 

13 weeks to 2nd April 2016

39 weeks to 2nd April 2016

 

Sales

(£m)

YoY Growth (£m)

YoY Growth (%)

Sales

(£m)

YoY Growth (£m)

YoY Growth (%)

  LFL stores

187.0

-1.6

-0.8%

563.8

+10.8

2.0%

  Home Delivery

17.9

+3.9

27.6%

45.9

+9.4

25.6%

  Total LFL *

204.9

+2.3

1.1%

609.8

+20.2

3.4%

  Non-LFL stores

24.1

+10.5

 

67.3

+34.3

 

  Total

229.0

+12.8

5.9%

677.1

+54.5

8.7%

 *Reported performance excludes the impact of timing differences described in the paragraph above

Underlying performance
Sales performance in the quarter reflected:

-    Strong footfall in LFL stores driven by Winter Sale performance. Improved conversion and higher transaction values year on year also contributed to growth;

-    Ongoing store portfolio expansion with one new superstore opened and a number of medium-sized refits completed; and

-    Continuing good growth in the on-line business, including a 27.6% increase in home delivery sales.

Gross Margin Percentage
Gross margin for the quarter was approximately 90bps higher than the comparator period, largely due to improved stock management and reduced cost of end of season product clearance, together with the beneficial impact of six days less Winter Sale in the quarter which was worth approximately 30bps. Our expectation is that gross margin for the full financial year will be in the region of 50bps ahead of the prior year.

Store Portfolio
The total number of superstores trading at the period end was 152. We expect to open two more new stores in the remainder of this financial year, and close two existing stores (relocations). This will take our total new store openings for the financial year to six leaving the year-end superstore count at 152. We are currently committed to a further five new stores openings which are likely to take place in the next financial year.

Financial Position
On 24 March 2016, the Group paid a special dividend of 31.5p per share, amounting to £63.9m. Reflecting this special dividend, net debt as at 2nd April 2016 was approximately £85m.  

Commenting on Dunelm's performance, John Browett, Chief Executive, said:

"We are pleased with the strong underlying sales growth during the last quarter following the unhelpful, mild conditions experienced in Q2. Overall we continue to increase our Homewares market share.

"We have enjoyed a good Easter, are looking forward to a successful final quarter and are confident of achieving our expectations for the full year.

"We continue to work hard on delivering our key projects across the business and remain excited about substantially improving the business for our customers, both in store and online, over the medium term, and developing Dunelm into a truly national homewares brand."

Source : Dunelm
http://dunelm.production.investis.com/ 

Analyst View

Connor Campbell, a senior market analyst at www.spreadex.com, gave us his view:

"With a 5.9% jump in third quarter revenue joined by a 1.1% rise in like-for-like sales it was a fantastic morning for home furnishing firm Dunelm, which rose nearly 5.5% as the day got underway. That caused the company to lift away from its recent slump, crossing the £9.50 mark for the first time since the middle of March."

 

07 April 2016

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