# Dunelm Group achieves record sales of £1.64bn

- Link: https://www.directorstalkinterviews.com/dunelm-group-achieves-record-sales-of-1.64bn/4121127762
- Published: 2023-09-20T07:39:00+01:00
- Author: Amilia Stone

**Dunelm Group plc **(LON:DNLM), the UK’s leading homewares retailer, has announced
its preliminary results for the 52 weeks to 1 July 2023.

| ** ** | **FY23****(52 weeks)** | **FY22****(52 weeks)** | **YoY****(52w vs 52w)** | ** ** | **FY22****(53 weeks)** | **YoY**** ** | 
| Total sales | £1,638.8m | £1,553.1m | +5.5% | £1,581.4m | +3.6% | 
| Digital % total sales^(1) | 36% | 35% | +1%pt | 35% | +1%pt | 
| Gross margin | 50.1% | 51.2% | -110bps | 51.2% | -110bps | 
| Operating costs: sales ratio | 38.0% | 37.5% | +50bps | 37.4% | +60bps | 
| Profit before tax (PBT) | £192.7m | £209.0m | -7.8% | £212.8m | -9.4% | 
| Diluted earnings per share | 75.0p | 82.1p | -8.6% | 83.6p | -10.3% | 
| ** ** |  |  |   | 
| ** ** | **FY23****(52 weeks)** | **FY22****(53 weeks)** | **YoY**** ** |  |   | 
| Free cash flow^(2) | £160.4m | £153.0m | +£7.4m |  |  |   | 
| Net debt^(3) | £30.7m | £23.8m | +£6.9m |  |  |   | 
| ** ** |  |  |  |  |  |   | 
| Ordinary dividend per share | 42p | 40p | +5.0% |  |  |   | 
| Special dividend per share | 40p | 37p | n/a |  |  |   |

**Highlights                                           **

·    Continuing strong sales growth of 6%^(4), as customers responded well across
the breadth of our expanding curated product range (up c.20,000 since FY22)

·    Unrelenting focus on offering value at all price points, passing on cost reductions
across over 1,000 products in the spring

·    Further 40bps market share gain in combined homewares and furniture markets
^(5)

·    Active customers grew by 2.8%^(6), with improved customer retention

·    Three new stores opened, including one relocation; continuing to see strong
payback underpinning confidence to accelerate openings over the next two years

·    Progress on our Pathway to Zero commitments^(7), with reductions in Scope 1
carbon intensity and plastic packaging use, both ahead of our targets, and increasing
use of sustainable materials

·    Further community engagement with circular solutions, such as take-back services,
a threefold increase in our ‘Delivering Joy’ gift campaign for local causes, and
over £800k raised for charities

**Financial highlights**

·    Record sales of £1.64bn (FY22: £1.55bn^(4))

·    50.1% gross margin (FY22: 51.2%^(8)), in line with our expectations, demonstrating
tight operational grip

·    Continued to focus on growth, investing more than £20m in digitalising our 
end-to-end operations and growing capability to seize multiple future opportunities

·    Profit before tax (“PBT”) of £193m (FY22: £209m^(9)), reflecting tight control
of margin amidst inflation in our operating costs and our ongoing commitment to 
investment for the future

·    £160m free cash flow (FY22: £153m)^(2), with strong conversion of operating
profit to cash of 81% (FY22: 70%)

·    Final ordinary dividend of 27p per share (FY22: 26p) taking the full year ordinary
dividend to 42p per share (FY22: 40p), an increase of 5%, reflecting confidence 
in the future growth prospects of the business

·    £163m in total returned to shareholders during the year, including special 
dividend of 40p declared with the interim results and paid in April. Over £1bn returned
over the past ten years^(10)

**Current trading and outlook**

·    Pleased with trading early in the new financial year

·    Consumer behaviour remains unpredictable but value proposition resonating well
and expect to see FY24 sales and PBT growth, driven by volume

·    Easing freight costs support gross margin

·    Tight operational grip to help mitigate ongoing inflation in operating costs

·    Continuing to invest in our customer offer, total retail system and marketing
ecosystem to support sustainable growth

·    Never been more confident in our plans to seize opportunities in the short,
medium and long term

> **Nick Wilkinson, Dunelm Group Chief Executive Officer, commented**_:_
> _“In a period of extensive economic uncertainty, we have maintained our focus 
> on enhancing our customer proposition, expanding our offer whilst staying fully
> committed to value and making every pound count. This has clearly resonated well
> with our customers, enabling us to continue growing both sales and market share.
> As ever, our amazing colleagues have been at the heart of this performance and
> I thank them all for their knowledge, personality, commitment and enthusiasm._
> _“As we manage the ongoing challenges, it is crucial that we do not lose sight
> of our longer-term ambitions. We are committed to raising the bar on value and
> joy for our customers and continuing to invest where we see good returns, so that
> we can seize the various opportunities ahead._
> _“We are excited about our future growth opportunity and more confident than ever
> that our commitment to value and tireless focus on improving the experience for
> our home-loving customers will leave us well placed to deliver sustainable growth
> in the future.”_

^(1) Digital includes home delivery, Click & Collect and tablet-based sales in store.

^(2) Free cash flow is defined as net cash generated from operating activities less
capex (net of disposals) and business combinations, net interest paid (including
leases) and loan transaction costs, and repayment of principal element of lease 
liabilities. A reconciliation of operating profit to free cash flow is included 
in the CFO review.

^(3) Excluding lease liabilities. Full definition provided in the table of alternative
performance measures.

^(4) For statutory purposes FY22 included a 53^(rd) week. Sales and sales growth
are shown on a comparable 52-week basis. On a 53-week basis FY22 sales were £1,581m
and sales growth was 4%.

^(5) GlobalData UK combined homewares and furniture markets, excluding kitchen and
bathroom furniture. Market share for the period July 2022 to June 2023 was 7.2%.

^(6) Growth in unique active customers who have transacted at least once in the 
12 months to June 2023. Management estimates using Barclays data.

^(7) Our Pathway to Zero commitments are described in more detail in the [sustainability](https://www.directorstalkinterviews.com/sustainability-green-stocks-news)
section of our corporate website at https://corporate.dunelm.com/sustainability.

^(8) For statutory purposes FY22 included a 53^(rd) week. Gross margin is shown 
on a comparable 52-week basis. On a 53-week basis FY22 gross margin was 51.2%.

^(9) For statutory purposes FY22 included a 53^(rd) week. PBT is shown on a comparable
52-week basis. On a 53-week basis FY22 PBT was £213m.

^(10) Ordinary dividends plus special dividends plus special distributions.

**Analyst Presentation:**

There will be an in-person presentation for analysts and institutional investors
this morning at 9.30am, hosted at Peel Hunt LLP, 100 Liverpool Street, London, EC2M
2AT, as well as a webcast and conference call with a facility for Q&A. For details,
please contact pauline.guenot@mhpgroup.com. A copy of the presentation will be made
available at https://corporate.dunelm.com.

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