Dunelm : Second Quarter Trading Update

16 January 2018

Dunelm Group plc

Second Quarter Trading Update

Dunelm Group plc ('Dunelm' or 'the Group'), the UK's leading homewares retailer, reports the following trading update for the second quarter of its current financial year, comprising the 13-week period ended 30 December 2017.

Revenue

Total revenue for the second quarter rose by 13.6% to £297.5m. Total like-for-like (LFL) revenue grew by 3.4%.

1. LFL Stores- stores trading for at least one full financial year prior to 2 July 2017 without any significant change of space

2. LFL Online - Dunelm.com

3. Non-LFL Stores- new stores opened within the current financial year or prior financial year

4. Non-LFL Online -Worldstores.co.uk, Kiddicare.com and Achica.com

Commenting on Dunelm's performance, Andy Harrison, Chairman, said:

'After a good first quarter, it is pleasing to see our sales momentum maintained with total sales growth, and like-for-like sales growth, of 13.6% and 3.4% respectively in the second quarter. This performance is driving our continued market share gains. We are now up to 169 superstores having successfully opened five in the quarter.

'Continuing rapid like-for-like online growth, of 36.8% in the first half, coupled with passing the first anniversary of the Worldstores acquisition, has helped our online sales grow to 16.0% of total sales in the first half (18.5% including Reserve and Collect). We are well on the way to becoming a genuine multi-channel retailer.

'Margins in our core Dunelm business have been maintained in the first half, although there has been a sales mix impact on margins from the Worldstores acquisition and the higher participation of seasonal and end of season products.

'Overall, we remain on track, with good sales growth and market share gains, offset by margin mix. We are well positioned to deliver good full year profit growth, after a small reduction in the first half, largely due to the consolidation of Worldstores losses.'

Gross Margin

Group gross margin percentage for the half year was 180bps lower than last year for two reasons. Firstly, the continued mix effect of the additional lower margin Worldstores sales reduced gross margin by 80bps. Secondly, we have continued to see the impact of our focus on newness in our ranges, which involves a planned higher participation of end of season and seasonal product lines. Overall these mix impacts reduced gross margins by 100bps. Excluding these factors, core margins were in line with prior year and we expect some margin improvement in the second half.

Store Portfolio

We opened five new stores in the quarter, including one relocation, bringing our total number of openings in the first half to a net nine openings, and our superstore footprint to 169 stores. No further stores are currently expected to open in this financial year.

Financial Position

As at 30 December 2017, net debt was approximately £134m and daily average net debt across the half was £117m. We have seen good year-on-year growth in free cashflow in the half.

Ends

For further information please contact:

Next scheduled events:

The half year results announcement will be on 20 February 2018.

The Q3 trading update will be on 12 April 2018.

Notes

1. Quarterly sales and margin analysis (prior year restated to include Worldstores):

*estimated group margin growth

**estimated underlying/pre-acquisition margin growth

Notes to Editors

Dunelm was founded in 1979 as a market stall business, selling ready-made curtains. The first shop was opened in Leicester in 1984 and over the following years the business developed into a successful chain of high street shops before expanding, following the opening of the first Dunelm superstore in 1991, into broader homewares categories. Dunelm is now a multi-channel retailer, with Dunelm.com being launched in 2005 and the acquisition of the Worldstores Group accelerating this yet further. Today, around 20% of sales are generated online.

Dunelm is market leader in the £12bnUK homewares market and active in the £11bnUK furniture market. It currently operates 173 stores, of which 169 are out-of-town superstores and 4 are located on high streets, and online stores, the largest of which can be found atwww.dunelm.com, www.worldstores.co.uk, www.kiddicare.com and www.achica.com. Dunelm employs approximately 10,000 colleagues and sells around 30,000 product lines in store, increasing to around 300,000 online.

Dunelm, 'The Home of Homes', offers a customer proposition of style, value, quality and ease of shopping. From its textiles heritage, in areas such as bedding, curtains, cushions, quilts and pillows, Dunelm has rapidly broadened its product offering to a complete homewares offer including the likes of kitchenware, dining, lighting, seasonal, wall art and rugs. Dunelm is one of the few national retailers to offer an authoritative selection of curtain fabrics on the roll, and owns a specialist UK facility dedicated to producing made-to-measure curtains.

The product range includes many, exclusive, own brand designs and premium brands such as Dorma, Fogarty and Kiddicare. This is augmented by a range of other well-known brands and license agreements.

Dunelm has been listed on the London Stock Exchange since October 2006 (DNLM.L) and has a current market capitalisation of approximately £1.4bn.