Dunelm Group Plc - Second Quarter Trading Update

Revenue

 

Total revenue for the second quarter rose by 13.6% to £297.5m. Total like-for-like (LFL) revenue grew by 3.4%.

 

 

13 weeks to 30 December 2017

26 weeks to 30 December 2017

 

Revenue

(£m)

YoY Growth (£m)

YoY Growth (%)

Revenue

(£m)

YoY Growth (£m)

YoY Growth (%)

LFL Stores1

228.8

2.4

1.1%

423.2

14.3

3.5%

LFL Online2

26.2

6.1

30.5%

46.0

12.4

36.8%

Total LFL

255.0

8.5

3.4%

469.3

26.7

6.0%

Non-LFL Stores3

22.3

14.8

 

35.2

25.0

 

Non-LFL Online4

20.2

12.4

 

41.0

33.1

 

Total Dunelm Group

297.5

35.7

13.6%

545.4

84.9

18.4%

 

1.     LFL Stores - stores trading for at least one full financial year prior to 2 July 2017 without any significant change of space

2.     LFL Online - Dunelm.com

3.     Non-LFL Stores - new stores opened within the current financial year or prior financial year

4.     Non-LFL Online - Worldstores.co.uk, Kiddicare.com and Achica.com

 

Commenting on Dunelm's performance, Andy Harrison, Chairman, said:

 

"After a good first quarter, it is pleasing to see our sales momentum maintained with total sales growth, and like-for-like sales growth, of 13.6% and 3.4% respectively in the second quarter. This performance is driving our continued market share gains. We are now up to 169 superstores having successfully opened five in the quarter.

 

"Continuing rapid like-for-like online growth, of 36.8% in the first half, coupled with passing the first anniversary of the Worldstores acquisition, has helped our online sales grow to 16.0% of total sales in the first half (18.5% including Reserve and Collect). We are well on the way to becoming a genuine multi-channel retailer.

 

"Margins in our core Dunelm business have been maintained in the first half, although there has been a sales mix impact on margins from the Worldstores acquisition and the higher participation of seasonal and end of season products.

 

"Overall, we remain on track, with good sales growth and market share gains, offset by margin mix. We are well positioned to deliver good full year profit growth, after a small reduction in the first half, largely due to the consolidation of Worldstores losses."

 

Gross Margin

 

Group gross margin percentage for the half year was 180bps lower than last year for two reasons. Firstly, the continued mix effect of the additional lower margin Worldstores sales reduced gross margin by 80bps. Secondly, we have continued to see the impact of our focus on newness in our ranges, which involves a planned higher participation of end of season and seasonal product lines. Overall these mix impacts reduced gross margins by 100bps. Excluding these factors, core margins were in line with prior year and we expect some margin improvement in the second half.   

 

Store Portfolio

 

We opened five new stores in the quarter, including one relocation, bringing our total number of openings in the first half to a net nine openings, and our superstore footprint to 169 stores. No further stores are currently expected to open in this financial year.

 

Financial Position

 

As at 30 December 2017, net debt was approximately £134m and daily average net debt across the half was £117m. We have seen good year-on-year growth in free cashflow in the half.