Dunelm Group Plc · LSE:DNLM
Dunelm — H1 FY24 Earnings Presentation
37 slides from Dunelm's earnings presentation, Feb 14, 2024
Slide 1: Interim results FY24
Interim results FY24 14 February 2024
Slide 2: Interim results FY24 agenda
Interim results FY24 1 Introduction 2 Financial review 3 Building the Home of Homes 4 Q&A 2
Slide 3: Introduction
Introduction Nick Wilkinson CEO 3
Slide 4: H1 highlights
H1 highlights 4.5% +50bps +4.2% +160bps Total sales Market share Active customers Gross margin growth growth1 growth2 growth £123m £91m 16p 35p FY23 H1: £117m FY23 H1: £102m FY23: 15p Profit before Free cash Interim dividend per Special dividend tax flow3 share per share 1 GlobalData UK combined hom
Slide 5: Continuing to deliver strongly
Continuing to deliver strongly Trading well in a tough environment… …while increasing our broad appeal • Outperforming in a challenging market • Growing market share across an expanding home offer • Volume and sales growth, through outstanding value • Driving sustainable growth through focused inves
Slide 6: Financial review
Financial review Karen Witts CFO 6
Slide 7: Financial summary
Financial summary H1 FY24 H1 FY23 YoY Sales £872.5m £835.0m +4.5% Gross margin 52.7% 51.1% +160 bps Operating cost % sales 38.1% 36.6% +150 bps Profit before tax £123.0m £117.4m +4.8% Diluted earnings per share 44.6p 45.8p -2.6% Free cash flow1 £91.1m £102.1m -£11.0m Net cash2 £6.2m £18.2m -£12.0m I
Slide 8: Strong sales growth in a volatile environment
Strong sales growth in a volatile environment H1 FY24 H1 FY23 YoY Total sales £872.5m £835.0m +4.5% Digital % total sales1 36% 34% +2ppts • Strong sales growth, driven by volume • Broad based growth across our channels and categories: • Offered outstanding value and relevant products • Continued to
Slide 9: Active customer growth and market share gains
Active customer growth and market share gains • Continued good growth in active customer numbers1 • Growth in all locations, age groups and incomes <£100k1 • Shopping frequency increased by a further 1.1%2 • Further market share gains in a broadly flat market3: • Share in the combined homewares and
Slide 10: Strong gross margin
Strong gross margin • Strong gross margin of 52.7% • 160bps higher than H1 FY23, benefitting from lower freight rates • Maintained tight commercial grip and promotional discipline while offering outstanding value to customers • Expect freight and fx headwinds in the second half, with unchanged full
Slide 11: Tight grip on operating costs, continuing to invest
Tight grip on operating costs, continuing to invest • We continued to maintain tight control over operating costs • Higher sales volumes increased costs by £8m • Costs were £10m higher due to inflation, mainly in wages • We invested a further £16m to improve our customer proposition • Increases were
Slide 12: PBT, interest, tax and EPS
PBT, interest, tax and EPS H1 FY24 H1 FY23 Financial income and expenses (£3.9m) (£4.4m) Profit before tax £123.0m £117.4m Tax (£32.3m) (£24.4m) Effective tax rate 26.3% 20.8% Profit after tax £90.7m £93.0m Basic earnings per share 44.9p 46.1p Diluted earnings per share 44.6p 45.8p • PBT of £123m in
Slide 13: Strong cash generation
Strong cash generation H1 FY24 H1 FY23 • Continued strong free cash flow £126.9m £121.8m generation of £91m Operating profit Depreciation & amortisation1 £40.4m £38.9m • Modest working capital outflow, with good quality and quantity Working capital outflow (£3.0m) (£1.9m) of stock Share-based paymen
Slide 14: Capital allocation policy supports attractive shareholder returns
Capital allocation policy supports attractive shareholder returns • Interim dividend of 16p, an increase of 7% (FY23: 15p) • Special dividend of 35p, reflecting continued strong cash generation • At the end of H1 and after dividend commitments, net debt of 0.3x is within target leverage range • Sign
Slide 15: FY24 guidance
FY24 guidance • Customers have been resilient, but the consumer outlook remains uncertain • Full year gross margin c.100bps higher than FY23 • Operating costs:sales ratio c.39% • 5-10 new store openings, with total capex of c.£30-40m • Expect working capital to remain broadly stable • Full year effe
Slide 16: Building the Home of Homes
Building the Home of Homes Nick Wilkinson CEO 16
Slide 17: Customer focused in a changing world
Customer focused in a changing world • It has never been more important to focus on customers, with attitudes evolving faster than ever • Being a specialist is helping us navigate changing customer habits • More capability in consumer insight is increasing knowledge and focus on the most meaningful
Slide 18: The Home of Homes
The Home of Homes Building the UK’s most trusted and valuable brand for homewares and furniture 1. Strengthening our 2. Extending and digitalising 3. Evolving our marketing customer offer our total retail system ecosystem Interim results FY24 18
Slide 19: 1. Strengthening our customer offer: Value & choice
1. Strengthening our customer offer: Value & choice Evolving our pricing hierarchy • Maintaining meaningful differentiation across our price tiers including innovating in better and best • In bedding we are introducing our Edited Life ranges to our best tier, still offering great value Improving our
Slide 20: 1. Strengthening our customer offer: Good & circular
1. Strengthening our customer offer: Good & circular Increasing customer choices • Expanded our own brand range of more sustainable products carrying our Conscious Choice label • New Rockfish collaboration offers durable stoneware, FSC wood, recycled ceramics and fabrics1 Introducing lower impact ma
Slide 21: 2. Extending our total retail system
2. Extending our total retail system On track with our store opening plans Innovating in format development • Stores underpin our total retail system, • Test and learn approach to leverage data amplifying our digital channels and marketing capabilities: • Opening a broader range of store sizes and •
Slide 22: 2. Digitalising our total retail system
2. Digitalising our total retail system Improving dunelm.com performance… …and optimising customer experience • Micro front-end updates completed for highest • More efficient site development and releases traffic pages • Better presentation of availability information • Enhanced site performance giv
Slide 23: 3. Evolving our marketing ecosystem
3. Evolving our marketing ecosystem Interim results FY24 23
Slide 24: 3. Evolving our marketing ecosystem
3. Evolving our marketing ecosystem Building personalisation • Delivering increasingly relevant content and experiences • Extensive testing e.g. product recommendations • Scaling personalised emails e.g. newsletter product content Optimising performance marketing • Testing new types of campaigns and
Slide 25: Summary and outlook
Summary and outlook • Outperformed in a volatile market • Delivered sales growth driven by volume, with increased customer numbers and frequency • Tight operational grip of gross margin and costs • Continuing to invest to increase our broad appeal as we build the Home of Homes • Pleased with trading
Slide 26: Q&A
Q&A 26
Slide 27: Appendix
Appendix 27
Slide 28: Income statement
Income statement H1 FY24 H1 FY23 YoY Revenue £872.5m £835.0m £37.5m Cost of Sales (£413.0m) (£408.0m) (£5.0m) Gross Profit £459.5m £427.0m £32.5m Gross margin % 52.7% 51.1% +160 bps Operating costs (£332.6m) (£305.2m) (£27.4m) Operating profit £126.9m £121.8m £5.1m Financial income £1.2m £0.2m £1.0m
Slide 29: Balance sheet
Balance sheet H1 FY24 H1 FY23 FY23 30 December 2023 31 December 2022 1 July 2023 Right-of-use assets £222.7m £241.9m £231.3m Other non-current assets £185.1m £188.4m £182.1m Inventories £231.5m £233.4m £211.0m Cash £56.2m £40.2m £46.3m Other current assets £25.6m £34.6m £26.1m Total assets £721.1m £
Slide 30: Net cash reconciliation
Net cash reconciliation Interim results FY24 30
Slide 31: Market share growth by category
Market share growth by category (as presented at our ‘At Home with Dunelm’ event in November 2023) Homewares 2019 share Furniture 2022 share Combined homewares and furniture market: c.£24bn Dunelm market share: c.7% Each bar represents a Dunelm homewares or furniture category which in total represen
Slide 32: 5-year financial summary
5-year financial summary FY19 FY201 FY21 FY22 FY23 H1 FY23 H1 FY24 (52 weeks) (52 weeks) (52 weeks) (53 weeks) (52 weeks) Total sales £1,100.4m £1,057.9m £1,336.2m £1,581.4m £1,638.8m £835.0m £872.5m Total sales growth 4.8% (3.9%) 26.3% 18.4% 3.6% 5.0% 4.5% Gross margin % 49.6% 50.3% 51.6% 51.2% 50.
Slide 33: 10-year dividend history
10-year dividend history FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Ordinary dividend per share Interim 5.5p 6.0p 6.5p 7.0p 7.5p - 12.0p 14.0p 15.0p 16.0p Final 16.0p 19.1p 19.5p 19.5p 20.5p - 23.0p 26.0p 27.0p n/a Total 21.5p 25.1p 26.0p 26.5p 28.0p - 35.0p 40.0p 42.0p n/a Special distributi
Slide 34: Investment proposition
Investment proposition Brand purpose A brand appealing to a wide range of customers, market leader in a large fragmented market, with a challenger brand mentality Product proposition A distinctive and specialist product portfolio - offering quality, value and style - largely own brand and sourced fr
Slide 35: ESG highlights
ESG highlights Colleagues • Continued to invest in learning and development opportunities to strengthen our leadership capabilities and promote a learning for life mindset • Maintained focus on financial wellbeing given the cost-of-living pressures • Offered new support packages for pregnancy loss,
Slide 36: Plan on a page
Plan on a page Our Vision is to build the UK’s most trusted and valuable brand for homewares & furniture Our Purpose: To help create the joy of truly feeling at home, now and for generations to come We will deliver our purpose by being Customer 1st, striving to improve our offer for savvy home-lover
Slide 37: Thank you
Dunelm) The Home of Homes Thank you