Dunelm Group PLC

Management Reports • Jan 7, 2014

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RNS Number : 0253X

Dunelm Group plc

07 January 2014

7th January 2014

TRADING UPDATE

26 weeks to 28th December 2013

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, issues the following trading update in respect of the 26 week period to 28th December 2013.

Revenue

Group revenue for the period was:

	H1: FY14	H1: FY13
Total sales	£356.3m	£340.1m
Total sales growth	+4.8%	+13.4%
LFL sales growth/decline1	-0.9%	+2.2%

Total revenue for the half year grew by 4.8%, benefitting from our continuing portfolio development programme which included six new store openings (one of which was a relocation).

Like for like (LFL) revenue for the half declined by 0.9%. After a first quarter which, as previously reported, was negatively impacted by the unusually warm weather in the period, the second quarter saw LFL growth of 2.9%, supported by our second autumn catalogue and our first ever TV advertising campaign.

Gross Margin Percentage

Gross margin for the half year is estimated to have improved by 100 basis points compared with the prior year as our direct sourcing programme continued to bring benefits and as we annualised the impact of clearing slow-moving promotional lines.

Strategy Progress

The total number of superstores trading at the period end was 131. With three leases signed in the last quarter, there were nine new stores committed as at the period end, including two relocations. Our current expectation is that four of these new stores will open in the remainder of this financial year, taking our total anticipated openings for the financial year to ten, including three relocations2. Our medium term target remains to operate from around 200 superstores across the UK.

We have seen continued progress in our multi-channel business following the successful transition to a new fulfilment centre in October, giving us further capability in home delivery and the capacity for additional growth going forward. In the most recent quarter multi-channel represented approximately 6% of total revenues.

Financial Position

The Group remains strongly cash generative with closing net cleared funds at bank of £43.9m. Daily average cleared funds since payment of our special dividend in October amounted to £37.4m.

Commenting on Dunelm's performance, Nick Wharton, Chief Executive, said:

"Dunelm traded robustly during this key period with our trusted "every day low price" positioning retaining a strong appeal for customers. Our home delivery proposition has become much stronger as a result of our new fulfilment centre, and we are beginning to see the benefits from our increased advertising investment to drive brand awareness. These investments have been funded through continued gross margin expansion and with continuing profitable growth from new stores, the Board anticipates that profit before tax for the first half of the year will be approximately £61.5m.

"With a strengthening customer proposition, increasing brand awareness, a significant new store growth opportunity and an exciting multi-channel agenda in place, the Board remains confident in the long term growth prospects for the business."

For further information please contact:

Dunelm Group plc	0116 2644 356
Nick Wharton, Chief Executive
David Stead, Finance Director
MHP Communications	020 3128 8100
John Olsen / Simon Hockridge

Forthcoming Newsflow.

Dunelm will release its interim results on 11th February 2014. There will be a presentation for analysts at 9.30am at the offices of UBS, 1 Finsbury Avenue, London EC2M 2PP. Those analysts who wish to attend are requested to contact Naomi Lane of MHP on the above number or at [email protected]. A copy of the presentation will be made available on the Dunelm website.

Notes

1.   Like for like sales represent revenues from stores trading for at least one full financial year prior to 29th June 2013 and exclude stores with significant change of space in the current or previous financial year.

2.   Of the three relocations anticipated in the financial year, two are superstore relocations and one will be a new superstore to replace two high street stores.

3.   Quarterly sales and margin analysis:

	Year to 28th June 2014
	Q1	Q2	H1
Total sales	£154.3m	£202.0m	£356.3m
Total sales growth	+1.7%	+7.3%	+4.8%
LFL sales growth	-5.3%	+2.9%	-0.9%
Gross margin growth	+70bps	+120bps*	+100bps*

*estimated

	Year to 29th June 2013
	Q1	Q2	H1	Q3	Q4	H2	FY
Total sales	£151.8m	£188.3m	£340.1m	£177.8m	£159.3m	£337.1m	£677.2m
Total sales growth	+13.8%	+13.1%	+13.4%	+15.4%	+6.4%	+11.0%	+12.2%
LFL sales growth	+3.0%	+1.6%	+2.2%	+5.2%	-2.8%	+1.2%	+1.7%
Gross margin growth	+40bps	+20bps	+30bps	+20bps	+80bps	+50bps	+40bps

Notes to Editors

Dunelm is market leader in the £11bn UK homewares market. The Group currently operates 140 stores, of which 131 are out-of-town superstores and 9 are located on high streets, and an on-line store, to be found at www.dunelm.com.

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 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 £1.8bn.

This information is provided by RNS

The company news service from the London Stock Exchange

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