Dunelm Group plc Strong like-for-like revenue growth, both in stores and online, demonstrates progress

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Dunelm Group plc (LON:DNLM) today announced interim Results for the 26 weeks to 29 December 2018

	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, Dunelm 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.”

1 Underlying numbers exclude exceptional items associated with the acquisition, integration and subsequent disposal/ closure of the Worldstores businesses.

2 Growth in the continuing Dunelm business was +8.7%.

3 EBITDA is defined as the operating cash flows before exceptional operating costs and movement in working capital as presented in the Consolidated Statement of Cash Flows.

4 Free cash flow is defined as net cash generated from operating activities less net cash used in investing activities.

5 Management understand that updated FY19 PBT analyst estimates are in the range of £114m – £118m.

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