Dunelm Group plc (LON:DNLM), the UK’s leading homewares retailer, reported the following trading update for the first quarter of its current financial year, comprising the 13-week period ended 29 September 2018.
Revenue
For the first quarter of our financial year we report total LFL revenue growth of +4.2%, a pleasing result in light of the strong prior year comparative (+9.3%).
With our customers increasingly interacting and transacting with us across multiple channels, we regard total like-for-like (LFL) as a more meaningful performance measure than individual channel LFL. However, in the interests of transparency we provide the following channel analysis:
– LFL store revenues increased by +1.3% year on year. Excluding a 1.7ppts year on year benefit of tablet-based selling in-store for home delivery, underlying LFL performance would have been -0.4%.
– LFL online revenues on Dunelm.com continued to grow strongly in the quarter by +33.3% (including tablet-based selling in-store, growth would have been +50.8%).
– Total multi-channel revenue for the quarter, defined as online revenue plus Reserve & Collect and tablet-based selling in-store, represented 14.8% of continuing Dunelm revenue, an increase of 3.9ppts year on year.
Including the benefit of changes to the store portfolio, total growth of continuing Dunelm business was +5.8%.
Total growth at group level was +0.1%, reflecting our withdrawal from the Worldstores businesses as previously announced.
|
|
13 weeks to 29 September 2018 |
||
|
|
Revenue (£m) |
YoY Growth (£m) |
YoY Growth (%) |
|
LFL Stores1 |
201.6 |
+2.5 |
+1.3% |
|
LFL Online – Dunelm.com2 |
26.5 |
+6.6 |
+33.3% |
|
Total LFL |
228.1 |
+9.1 |
+4.2% |
|
Non-LFL Stores3 |
16.1 |
+4.2 |
+35.2% |
|
Total continuing Dunelm |
244.2 |
+13.3 |
+5.8% |
|
Non-LFL Online – Worldstores4 |
4.0 |
-13.0 |
-76.7% |
|
Total Group |
248.2 |
+0.3 |
+0.1% |
1. LFL Stores – stores trading for at least one full financial year prior to 2 July 2018 without any significant change of space. LFL stores revenues include Reserve & Collect sales, and home delivery sales in respect of orders placed via in-store tablets
2. LFL Online – Dunelm.com (excludes Reserve & Collect sales, and home delivery sales in respect of orders placed via in-store tablets)
3. Non-LFL Stores – new stores (including relocations) opened in the current or previous financial year, and existing stores with significant change of space in the current or previous financial year
4. Non-LFL Online – Worldstores.co.uk, Kiddicare.com and Achica.com (these websites are now closed)
Gross Margin
As expected following the elimination of lower margin sales from Worldstores businesses, gross margin was stronger with a +130bps increase at Group level compared with the first quarter last year. More importantly, we achieved growth in continuing Dunelm gross margin of +50bps, as the dilutive effect of Worldstores’ lines transferred to Dunelm.com was more than offset by FX benefits and improved sourcing.
Business Development
We have now closed the Worldstores and Kiddicare websites and have completed the transfer of approximately 20,000 lines onto Dunelm.com.
We remain on track to launch our new Dunelm.com web platform in Q3 of this financial year which will allow us to launch Click & Collect and subsequent developments (such as improved delivery options) with much greater agility going forward.
There was one new superstore opening in the first quarter (a relocation), leaving our superstore footprint at 169 stores. At this point we are legally committed to one new store that is due to open towards the end of the financial year (which is also a relocation), and we remain in discussion on further new store opportunities.
During the quarter we launched a new brand campaign as part of our drive to reach new customers. This is an integrated marketing campaign across TV, radio and social media platforms. The campaign also includes an ad-funded TV programme, Back to Mine, in partnership with ITV.
Financial Position
As at 29 September 2018, net debt was approximately £109m (FY18: £130m). Daily average net debt across the period amounted to £104m (FY18: £115m).
Comment from Nick Wilkinson, Dunelm’s Chief Executive:
“We delivered a good trading performance in the first quarter. Our positive LFL growth highlights the strength of our customer offer which we are continually working hard to improve as we focus on our core business again under one brand, with one platform and one supply chain.
“We continue to improve the multichannel experience for our customers and our stores play a vital role in this. I am pleased at the progress we are making with tablet-based selling in store to offer our full product range to all our customers.
“Whilst we are cautious about the months ahead due to the level of market and customer uncertainty, I see plenty of opportunity over the medium term as we continue our journey to become the leading multichannel retailer in our sector, helping our customers create homes they love.”
