TIDMDNLM
RNS Number : 2544C
Dunelm Group plc
12 April 2017
12(th) April 2017
Third Quarter Trading Update
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 1(st) April 2017.
Revenue
The homewares market remains in decline. We believe that we are
continuing to outperform the market and that the margin of
overperformance has increased. The market decline began in the
fourth quarter last year and we are now approaching its
anniversary.
Total revenue for the third quarter rose by 11.4% to GBP255.1m.
Total revenue, excluding Worldstores, rose by 1.0% to GBP231.3m.
Total like-for-like (LFL) growth (combining LFL stores and Home
Delivery) declined by 2.2%.
With Easter being later this year, we expect approximately 1.5%
of LFL sales to move from the third to the fourth quarter. This
broadly nets off with the 1.7% of LFL sales that moved from Q2 to
Q3 as a result of the timing of our Winter Sale compared to last
year.
We continue to see strong growth in the online business,
including a 21.0% increase in home delivery sales for the
quarter.
13 weeks to 1(st) 39 weeks to 1(st)
April 2017 April 2017
-------------------- ---------------------------------- ----------------------------------
Sales YoY Growth YoY Growth Sales YoY Growth YoY Growth
(GBPm) (GBPm) (%) (GBPm) (GBPm) (%)
-------------------- -------- ----------- ----------- -------- ----------- -----------
LFL stores 190.8 -8.6 -4.3% 579.8 -20.9 -3.5%
-------------------- -------- ----------- ----------- -------- ----------- -----------
Home Delivery 21.7 +3.8 +21.0% 55.4 +9.4 +20.5%
-------------------- -------- ----------- ----------- -------- ----------- -----------
Total LFL 212.5 -4.8 -2.2% 635.2 -11.5 -1.8%
-------------------- -------- ----------- ----------- -------- ----------- -----------
Non-LFL stores 18.8 +7.1 - 48.5 +18.1 -
-------------------- -------- ----------- ----------- -------- ----------- -----------
Total Dunelm
excl. Worldstores 231.3 +2.3 +1.0% 683.7 +6.6 +1.0%
-------------------- -------- ----------- ----------- -------- ----------- -----------
Worldstores* 23.9 +23.9 - 32.0 +32.0 -
-------------------- -------- ----------- ----------- -------- ----------- -----------
Total Dunelm
Group 255.1 +26.1 +11.4% 715.7 +38.6 +5.7%
-------------------- -------- ----------- ----------- -------- ----------- -----------
*Worldstores year to date figures represent the eighteen-week
period post acquisition from 28th November 2016, until 1st April
2017.
Gross Margin
Dunelm's gross margin percentage (excluding Worldstores) for the
quarter increased by approximately 75bps. This reflects a
short-term benefit, and we expect half of this benefit to continue
into the fourth quarter. The run rate of gross margin going into
the next financial year is expected to be broadly flat compared to
the same time last year.
Worldstores' gross margin percentage in the quarter improved by
approximately 500 bps compared to the first five weeks of trading
under our ownership, as our ongoing stabilisation of the business
and focus on customer service reduced the level of cancellations
and returns.
Worldstores
The integration of Worldstores is going well. Performance
continues to stabilise following the acquisition and is in line
with our expectations. We continue to expect that the business will
be at least break-even in Dunelm's financial year ending 30 June
2018.
We remain excited by the opportunities that Worldstores offers.
It will allow us to accelerate the growth of our internet operation
and enhance our position as the destination homewares retailer in
the UK, both online and offline. Our detailed integration plan
should realise significant benefits including:
-- the development of a next day delivery proposition for a much
wider range of products including furniture;
-- a better two-man owned delivery service that is more reliable
for customers and cheaper to operate;
-- offering Kiddicare products in Dunelm stores and to a greater
number of customers online; and
-- a new technology platform that will enable much faster
development of products and services for customers.
Store Portfolio
We opened two new stores in the period leaving our superstore
footprint at 159 stores, a total increase of seven openings so far
this year. We are now legally committed to a further five new
stores of which at least one is due to open in the current
financial year, and two are to open very early in the next
financial year. We have completed six store refits within the year
to date and have at least five planned for the remainder of the
financial year.
Business Investment
We are continuing to develop our strategic plans and invest in
the business, particularly in systems, capability and
marketing.
We have considerably improved our supply chain with the opening
of a new warehouse and the consolidation of our transport
suppliers. As expected the disruption to in-store availability seen
during the second quarter has abated and availability has improved
to normal levels. We have also seen significantly fewer
transitional costs in the second half of the year, compared to the
GBP3m of additional costs incurred in the first half.
Financial Position
As at 1(st) April 2017, net debt was approximately GBP117m.
Daily average net debt across the third quarter amounted to GBP88m.
The movement in net debt reflects the investment in Worldstores,
higher capital expenditure on new stores and refits, as well as the
acquisition of three freehold properties.
Commenting on Dunelm's performance, John Browett, Chief
Executive, said:
"We are trading in a volatile retail environment at present, but
have continued to outperform the homewares market and so enhanced
our position as market leader. As a result, our expectations for
the full year remain unchanged.
"We remain excited by the acquisition of Worldstores. The
business has stabilised and our integration plans are developing
well. Our home delivery channel goes from strength to strength and
will be enhanced by the significant benefits that the acquisition
provides to our product range, including the Kiddicare brand,
delivery, and speed of IT development.
"We continue to focus on and invest in our long-term growth
initiatives, to ensure that Dunelm's low cost model remains a key
strategic advantage allowing us to generate cash whilst maintaining
our unique offer of value for money, an unrivalled range and great
service."
Ends
For further information please contact:
Dunelm Group plc 0116 2644439
John Browett, Chief Executive
Keith Down, Chief Financial
Officer
MHP Communications 020 3128 8100
John Olsen/Simon Hockridge/Gina dunelm@mhpc.com
Bell
Forthcoming Newsflow:
Dunelm's Q4 trading update will be on 7(th) July 2017. The full
year results announcement will be on 13th September 2017.
Notes
1. Like-for-like (LFL) sales represents revenues from stores
trading for at least one full financial year prior to 3(rd) July
2016 and excludes stores with significant change of space in the
current or previous financial year.
2. Quarterly sales and margin analysis (excluding Worldstores):
39 weeks to 1st April 2017
-------------- -------------------------------------------------------------
Q1 Q2 H1 Q3 Q4 H2 FY
-------------- ---------- ---------- ---------- ---------- --- --- ---
Total sales GBP198.7m GBP253.8m GBP452.4m GBP231.3m
-------------- ---------- ---------- ---------- ---------- --- --- ---
Total sales
growth -1.8% 3.3% 1.0% 1.0%
-------------- ---------- ---------- ---------- ---------- --- --- ---
LFL sales
growth -3.8% 0.2% -1.6% -2.2%
-------------- ---------- ---------- ---------- ---------- --- --- ---
Gross margin 0bps +10bps +5bps +75bps
growth*
-------------- ---------- ---------- ---------- ---------- --- --- ---
*estimated
52 weeks to 2(nd) July 2016
----------------- ----------------------------------------------------------------------------------
Q1 Q2 H1 Q3 Q4 H2 FY
----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total sales GBP202.3m GBP245.7m GBP448.1m GBP229.0m GBP203.8m GBP432.8m GBP880.9m
----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total sales
growth 12.0% 8.8% 10.3% 5.9% 1.8% 3.9% 7.1%
----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
LFL sales
growth 5.5% 3.9% 4.6% 1.1% -0.6% 0.3% 2.5%
----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross margin +20bps +30bps +30bps +90bps +80bps +90bps +60bps
growth/decline
----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Notes to Editors
Dunelm is market leader in the GBP11bn UK homewares market. It
currently operates 163 stores, of which 159 are out-of-town
superstores and 4 are located on high streets, and an online store,
to be found at www.dunelm.com.
The company acquired the assets of Worldstores, including Achica
and Kiddicare, on the 28(th) November 2016. Worldstores is one of
the UK's largest online retailers of products for the home and
garden, with over 500,000 products on the site. Achica is a
members-only online store offering furniture, homewares and
accessories, often at significant discounts to RRPs for limited
periods through flash sales. Kiddicare is a multichannel retailer,
selling nursery supplies and merchandise for children and young
families.
Dunelm's "Simply Value for Money" customer 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 Fogarty, 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 GBP1.3bn.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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