20 October 2022
Dunelm Group plc
First quarter trading update
Robust trading and unchanged expectations in a challenging environment
Dunelm Group plc (“Dunelm” or “the Group”), the UK’s leading homewares retailer, updates on trading for the 13-week period ended 1 October 2022.
| Q1 | |||
| FY23 | YoY | 3YoY2 | |
| Total sales | £357m | -8% | +36% |
| Digital % total sales1 | 33% | +0ppts | +14ppts |
1 Digital includes home delivery, Click & Collect and tablet-based sales in store
2 3YoY represents performance against the comparable period in FY20 (pre-pandemic)
Highlights
· Robust trading performance in line with expectations, with Q1 sales -8% year on year, against a very strong comparative period, and 36% higher than the same period in FY20 (pre-pandemic)
· Continuing to offer customers outstanding value at all price points, whilst maintaining tight operational grip across the business
· FY23 guidance remains unchanged despite the challenging macroeconomic environment
Continued robust sales performance
We were pleased with our trading performance in Q1, in a challenging environment. Sales of £357m were down 8% year on year, as expected, given the very strong comparative period, with Q1 last year benefitting from pent up demand and our rescheduled Summer Sale. Compared to FY20 (pre-pandemic), total sales grew by 36%, in line with the 3YoY growth rates seen in the latter part of FY22. This performance demonstrates the strength of our business model against a challenging external backdrop, and we continue to be sharply focused on offering outstanding value to our customers.
Digital sales made up 33% of total sales in the quarter, in line with the same period last year, and we are continuing to see robust sales from our total retail system across our categories, including a very good response from customers to our seasonal ranges such as ‘Winter Warm’.
Gross margin
As expected, gross margin was 130bps lower than last year, reflecting more normal patterns of customer behaviour. We are focused on maintaining tight operational grip and remain confident of delivering a full year gross margin of c.50%, in line with previous guidance.
Outlook
The macroeconomic environment remains challenging, and our primary focus is on continuing to offer outstanding value and choice to all our customers, across our broad range of homewares products. We have a strong business model; our focus on mitigating external headwinds whilst making decisions for the long-term is helping us to navigate the current inflationary challenges. Whilst exchange rate movements have been particularly volatile in recent weeks, we are very well hedged for the remainder of FY23. We are confident in the resilience of our business and our guidance for FY23 is unchanged from the Preliminary Results announcement last month.
Nick Wilkinson, Chief Executive Officer, commented:
“It has been another robust quarter for Dunelm against a very strong comparative period, which illustrates the strength and resilience of our business model and the appeal of our market-leading offer.
“Dunelm has emerged from the last two years as a bigger, better business, with total sales up 36% against the same period pre-Covid. We have benefitted from the commitment, expertise and adaptability of our colleagues and supplier partners – the same qualities that are serving the business as we navigate the current inflationary challenges.
“As we enter what will clearly be a challenging winter for consumers, our absolute focus remains on making every pound count for everyone, through a tight grip on operations. We will continue to offer outstanding value at all price points, so our customers can make their own choices around adapting to the economic backdrop. This focus on value has seen Dunelm successfully navigate previous periods of economic uncertainty.
“The landscape is a demanding one, but we feel both energised and confident in our ability to grow market share as the 1st choice for UK homelovers.”