Dunelm Group plc - Interim Results

Focus on core business delivers good growth in revenue, profits and cash

  

 

 

FY19 H1

 

 

 

Reported

FY18 H1

 

 

 

Underlying1

 

FY18 H1

 

 

 

Exceptional items

FY18 H1

 

 

 

Reported

Year-on-year change

 

Underlying

Year-on- year change

 

Reported

Revenue

£551.8m

£545.4m

 

£545.4m

+1.2%

+1.2%2

Like-for-like revenue

£506.7m

£473.9m

 

£473.9m

+6.9%

+6.9%

Gross margin

50.3%

48.6%

 

48.6%

+170bps

+170bps

EBITDA3

£92.8m

£79.1m

(£2.7m)

£76.4m

+17.3%

+21.5%

Profit before tax

£70.0m

£60.0m

(£3.7m)

£56.3m

+16.7%

+24.3%

Free cash flow4

£91.2m

 

 

£27.8m

 

+228.1%

Net debt

(£72.9m)

 

 

(£134.3m)

 

+45.7%

Net debt/LTM EBITDA

0.48x

 

 

0.96x

 

 

Basic EPS

27.6p

23.9p

 

22.3p

+15.5%

+23.8%

Diluted EPS

27.5p

23.8p

 

22.2p

+15.5%

+23.9%

Interim dividend

7.5p

 

 

7.0p

 

+7.1%

Highlights

·      Strong like for like (LFL) revenue growth of 6.9%, with increases in both stores (3.8%) and online (35.8%)

·      Growth in unique customer numbers, both instore (+4.3%) and online (+18.7%), combined with improved brand awareness

·      Multichannel proposition continues to develop and represents 15.7% of total revenues, up 3.9ppts on last year

·      Gross margin improvement of 170bps due to improved sourcing, FX benefits and removal of less profitable Worldstores lines

·      PBT of £70.0m, up 16.7% year on year (FY18: £60.0m before exceptional costs)

·      Strong cash conversion with free cash flow of £91.2m (FY18: £27.8m)

·      Interim dividend increased by 7.1% to 7.5 pence per share (FY18: 7.0p)

Nick Wilkinson, Chief Executive Officer, commented:

"It's been a good first six months with our strong performance reflecting the focus we have placed back on the core Dunelm business. The like-for-like revenue growth, both in stores and online, demonstrates the progress we are making in improving our multichannel proposition whilst maintaining the breadth and depth of our specialist customer offer in homewares.   On top of this, good operational discipline and keeping things simple, is driving a better financial performance." 

"We traded well through our key Winter Sale period and remain pleased with our performance to date.  As previously highlighted, we are cautious about the outlook for the remainder of the financial year due to the continuing political uncertainty in the UK.   We are confident in delivering market expectations5 for the full year assuming no material change in the macro-economic environment."

"Looking to the future, we will continue to grow the business as we become a truly multichannel homewares destination, making Dunelm the first choice for even more customers, and further strengthening our market leading position."

CHAIRMAN'S STATEMENT

We delivered good progress during the first six months of the year in a challenging environment. Nick Wilkinson, who became our CEO just over a year ago, has brought a renewed focus on the core Dunelm business, resulting in improved customer scores, higher colleague engagement and a stronger product offering. This focus underpinned our 6.9% growth in LFL revenue and increased market share. Nick and his team have also brought tighter operational grip, and as a result our underlying pre-tax profits for the half year rose by almost 17% to £70m.

The additional costs and integration challenges that came with the Worldstores acquisition are now behind us and the benefits can be seen in the continuing strong growth in our online revenue (+35.8%) and further strengthening of our multichannel credentials.

Our Dunelm colleagues have once again done a fantastic job and I would like to thank them for their hard work and dedication. I would also like to thank our trading partners for their support.

Free cash flow has increased to £91.2m (H1 FY18: £27.8m) and the Board has declared a 0.5 pence increase in the Interim dividend to 7.5 pence per share.

We were delighted to welcome Laura Carr who joined as our new Chief Financial Officer in November 2018.  Rachel Osborne stepped down as a non-Executive Director in August 2018, following her appointment as CFO of a competing business.  A search for her successor is underway.

Looking ahead, the retail trading climate is likely to remain difficult during this period of exceptional political uncertainty. This is a world where only the best companies will prosper and I am confident that Dunelm will be one of those companies.