Dunelm Group Plc – Final Results 2021

Dunelm Group plc

Preliminary Results for the 52 weeks ended 26 June 2021

Moving forward and becoming the 1^st choice for home

Dunelm Group plc (“Dunelm” or “the Group”), the UK's leading homewares retailer, today announces its preliminary results for the 52 weeks to 26 June 2021.

FY21 Highlights

• Very strong sales growth of 26% (21% vs FY19), despite stores being closed to customers for more than a third of the financial year, reflecting the strength of our total retail system
• Significant market share gain, with FY21 UK homewares market share up 1.6%pts to 9.1%⁴
• Active customer growth of 8.5%⁵, driven by strong growth across digital channels
• Digital sales grew by 115%, with successful scaling of technology and operations to respond to the increase in demand, including significant expansion of our Click & Collect offer
• Gross margin +130bps, benefiting from a smaller Winter Sale due to store closures, sourcing gains and the delayed timing of our Summer Sale (into FY22)
• PBT of £157.8m, +45% (FY20: £109.1m, FY19 £125.9m) reflecting ongoing focus on operational grip, despite the impact of store closures
• Free cash flow of £108.5m, including working capital outflow of £35.0m (FY20 working capital inflow £80.1m), with net cash at period end of £128.8m (FY20: £45.4m)
• Commitment to a Net Zero Pathway, targeting a 50% reduction in greenhouse gas emissions by 2030
• Final dividend of 23.0p, taking the full year ordinary dividend to 35.0p, reflecting our strong performance and confidence in future growth
• In addition, and noting that no dividends were paid to shareholders in respect of FY20, the Board has declared a special dividend of 65.0p in line with our published capital policy, maintaining a prudent approach to leverage given the uncertain macroeconomic outlook

Current Trading

Sales growth in the first ten weeks of the new financial year has been encouraging, including a positive response from customers to our Summer Sale in July and continued outperformance versus the homewares market⁶. This strong start to the year, showing further growth against a tough comparative period, has been better than anticipated. Whilst there remains some macro level uncertainty relating to further demand and supply impacts from Covid-19, in the absence of any trading restrictions, the Board expects that FY22 PBT will be modestly ahead of the top of the range of analysts' expectations⁷.

Nick Wilkinson, Chief Executive Officer, commented :

“We delivered an excellent performance in FY21, despite our stores being closed for more than a third of the year, demonstrating the strength and resilience of our business model and the adaptability and commitment of our colleagues and suppliers.  

“The digital investments we had made enabled us to rapidly adapt to the changing environment and deliver strong growth and an improved customer experience. We are emerging from the pandemic as a stronger and better business, having transitioned from being a physical retailer with digital aspirations to being a proven, digital first, multichannel retailer.

“We have renewed purpose, bold ambitions and an increased opportunity to attract more customers and grow their frequency. We aim to be our customers' 1st choice for home, helping everyone to create the joy of truly feeling at home, now and for the generations to come. Our business plans will deliver for all our stakeholders, and include our commitment to a Net Zero Pathway, with an absolute reduction in emissions of 50% by 2030.

“Whilst the macro-outlook remains uncertain and we are seeing some industry-wide issues such as ongoing supply chain disruption and inflationary pressures from raw materials, freight costs and driver shortages, we feel well placed to continue managing these challenges.

“Trading in the first ten weeks of the new financial year has been encouraging, with growth against strong comparatives and continued market outperformance.”

1 Digital includes home delivery, Click & Collect (or Reserve & Collect before October 2019) 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, interest on lease liabilities and repayment of lease liabilities

3 Excluding lease liabilities, including unamortised debt issue costs

⁴ GlobalData UK homewares market, July 2020 to June 2021

5 Unique active customers who have shopped in the 12 months to June 2021, based on management estimates using Barclays data

⁶ Homewares market (excluding Dunelm) calculated using GfK data and management estimates. Dunelm growth for comparable categories

⁷ Management understand the range of analysts' estimates (which have been updated since the Q4 trading statement on 14^th July 2021) for FY22 Profit Before Tax is £153-£175m