Dunelm Group plc (LON:DNLM), the UK’s leading homewares retailer, today announced its interim results for the 26 weeks to 28 December 2019.
|FY20 H1Pre IFRS 16||Impact of IFRS 16||FY20 H1 Reported||FY19 H11 Reported||Year on year change Reported|
|Profit before taxation||£84.9m||(£1.3m)||£83.6m||£70.0m||+19.4%|
|Free cash flow3||£64.4m||–||£64.4m||£91.2m||(29.4%)|
|Net debt (excl. IFRS 16 lease liabilities)4||(£67.7m)||–||(£67.7m)||(£72.9m)||+7.1%|
· Total like for like (LFL) revenue growth of 5.6%, against a strong comparative period (FY19 H1: 7.8%)
· Successful launch of the new digital platform enabling a new phase of growth for Dunelm
· Store sales continue to grow across most product categories, driven by positive footfall, tablet-based selling and Click & Collect
· Growth in total unique active customers5 of 8.8% underpinned by improved brand awareness and consideration
· Gross margin improvement of 120bps mainly due to sourcing gains and fewer markdowns
· Profit before taxation (PBT)6 of £83.6m, up 19.4% year on year or 21.3% on a pre-IFRS 16 basis (FY19: £70.0m)
· Strong free cash flow of £64.4m, despite paying £20m additional corporation tax (mainly due to regulatory timing changes)
· Net debt (excluding IFRS 16 lease liabilities) of £67.7m (FY19: £72.9m) after paying a special dividend of £64.6m in October 2019
· Interim dividend increased by 6.7% to 8.0 pence per share (FY19: 7.5p)
Nick Wilkinson, Dunelm Group Chief Executive Officer, commented:
“We have made good progress over the first half, following a strong performance last year, which is reflected in the significant growth delivered in both sales and profits.
“We continue to build strong foundations for future growth. The successful launch of our digital platform accelerates our ability to innovate our customer proposition and we remain focused on operational improvements across all areas of the business.
“We also continue to broaden our customer base and following the successful sponsorship of ITV’s This Morning, which concludes in March, we are excited about our new sponsorship deal with Channel 4’s First Dates programme, starting later this week, which will enable us to reach more customers with the Dunelm brand.
“The third quarter has started well, with a successful Winter Sale across the total retail system. As a result, we expect full year FY20 profit before tax to be slightly ahead of the top of the latest range of analyst expectations7. We are monitoring the Coronavirus outbreak carefully. To date we have not assumed any material disruption to our supply chain or any financial impact in the year.
“We have plenty to look forward to over the remainder of the year as we strengthen the Dunelm offer and help more customers to create the home they love.”
1 FY19 financials prepared on an IAS 17 basis
2 Gross margin is calculated as gross profit divided by revenue
3 Free cash flow is defined as net cash generated from operating activities less net cash used in investing activities and repayment of, and interest on, lease liabilities
4 Net debt (excluding IFRS 16 lease liabilities) is defined as cash and cash equivalents less total borrowings net of unamortised issue costs. For consistency, and because the underlying liabilities of the business have not changed, IFRS 16 lease liabilities are not included
5 Unique active customers who have shopped in the last 12 months, based on management estimates using Barclays data
6 FY20 PBT is shown on an IFRS 16 basis, which has been adopted for the first time this year
7 Management understand that updated FY20 PBT analyst estimates are in the range of £135.0m to £137.3m (adjusted for IFRS 16 where appropriate)