Dunelm Group Plc · LSE:DNLM
Dunelm — H1 FY22 Earnings Presentation
36 slides from Dunelm's earnings presentation, Feb 9, 2022
Slide 1: Interim Results FY22
Dunelm] The Home of Homes Interim Results FY22 9 February 2022
Slide 2: Interim Results FY22
= iuterim Results | FY22
Slide 3: Introduction - Nick Wilkinson, CEO
— Introduction ——= Nick Wilkinson - CEO
Slide 4: H1 FY22 headline metrics
+10.6% +36.0% +121% +6.3% Active Total sales 2YoY total 2YoY digital customer growth sales growth1 sales growth2 growth3 +80bps +25.3% £106m 51p Interim and Gross margin Profit before Free cash flow4 special increase tax growth dividends 1 Due to the store closure periods in H1 FY21, a comparison to
Slide 5: Our plans to digitise the business are delivering accelerated growth
• Our plans to digitise the business are delivering accelerated growth 12 month rolling sales £1.4bn • Our digital platform is extending the reach of Calendar year 2021 our brand and product offer • Improving product design, development and supply • Physical shopping experience, including refits and
Slide 6: Interim Results FY22
6 INTERIM RESULTS – FY22
Slide 7: H1 FY22 financial summary
H1 FY22 H1 FY21 YoY Sales £795.6m £719.4m +10.6% Gross margin 52.8% 52.0% +80 bps Operating cost % sales 34.8% 35.5% (70) bps Profit before tax £140.8m £112.4m +25.3% 1 Free cash flow £106.3m £98.0m +£8.3m 2 Net cash £47.7m £140.6m (£92.9m) Diluted earnings per share 55.4p 44.1p +25.6% Interim divid
Slide 8: Sales growth across channels
H1 FY22 YoY 2YoY Total sales1 £795.6m +10.6% +36.0% 2 Digital % total sales 33% (2)%pts +13%pts • Strong growth across channels, especially store sales • Digital sales of £263m, more than double H1 FY20 • Q1 growth supported by non-LFL Summer Sale • Higher growth in furniture categories driven by im
Slide 9: Gross margin up 80bps
• Gross margin +80bps compared to H1 FY21 • Improvement driven by high full price sell through of seasonal ranges and provisions taken in comparative period relating to store closures • H2 margin likely to be impacted by two Sale events as we revert to historic calendar. FY22 expected ~30-50bps lowe
Slide 10: Operating costs and operating leverage
• Better than expected operating leverage in H1 driven by strong performance in stores • Benefit of JRS repayment in FY21 substantially offset by reinstatement of rates this year Cost: sales Cost: sales • Accrued incentives in H1 FY21 34.8% 35.5% impacted by Covid closures • Supply chain investments
Slide 11: Profit before tax to earnings per share
H1 FY22 H1 FY21 Financial income and expenses (£1.9m) (£5.9m) Profit before tax £140.8m £112.4m Tax (£27.4m) (£22.2m) Effective tax rate 19.5% 19.7% Profit after tax £113.4m £90.2m Basic earnings per share 55.9p 44.6p Diluted earnings per share 55.4p 44.1p • Financial income and expenses returns to
Slide 12: Cash flow and free cash flow
• Strong cash generation with free cash H1 FY22 H1 FY21 flow: operating profit ratio of 74% (H1 Operating profit £142.7m £118.3m FY21: 83%) Depreciation & amortisation 1 £38.1m £38.8m • Working capital outflow due to decision Working capital (outflow) / inflow (£21.0m) (£1.3m) to build inventory lev
Slide 13: Interim and special dividend, capital policies
• Interim ordinary dividend of 14 pence (FY21: 12 pence) reflecting strong H1 performance and confidence in the future • Given the strength of the business performance, latest outlook and net cash position, announcing today a further special dividend of 37 pence to return to a modest level of levera
Slide 14: Outlook and H2 considerations
• H2 comparatives impacted by closures in Q3 FY21 and strong re-opening in Q4 FY21 • FY gross margin 30-50bps lower than FY21 – reverting to historic Sale calendar • Expect H2 investments to accelerate compared to H1 levels as new supply chain facilities are fully operational and we invest further i
Slide 15: Interim Results FY22
15 INTERIM RESULTS – FY22
Slide 16: For all home-lovers: brand, colleagues and carbon targets
• For all home-lovers: all tastes and budgets, without judgement • Underpins the extraordinary steps necessary to achieve our carbon targets • Committed to our colleagues ‘feeling at home, wherever they work’ • Delighted that nearly 1,000 colleagues share £10.8m from the latest sharesave scheme • Am
Slide 17: 85% of five-year growth from market share gains
In the five years to calendar year Long term sales CAGR of 10% 2021, c.85% of our growth has come from market share gains CAGR 2Yr 5Yr 10Yr Market +2.2% +1.5% +1.4% Dunelm +12% +10% +10% c.15% of c.85% of sales sales growth growth Total Total sales sales £0.9bn £1.4bn Market growth based on internal
Slide 18: Long term market share gains from improving customer proposition
Long term market share gains driven by continuously and sustainably improving our customer proposition 18 INTERIM RESULTS – FY22
Slide 19: Broad based growth with opportunity across all categories
Broad based growth with significant opportunity for further growth across all categories Everyday Rewarding Decorative Room Considered Customer necessities… essentials… enhancements… refreshes… permanents… missions used day to day where comfort matters that enhance the look to keep the home up to to
Slide 20: Broadening our appeal across all UK home lovers
We are broadening our appeal across all UK home lovers Age groups Regions Income levels Active customers1 (+3 million since 2016) Brand awareness2 All age groups3 All regions3 All income levels3 (+c.10%pts since 2016) followers of local Facebook community groups 1 Internal analysis based on Barclays
Slide 21: Digital growth is incremental and fuelling store sales
Digital growth is incremental… …and is fuelling store sales Digital sales have grown 5x in 5 years +30% increase in average store sales2 Total Total sales sales £0.9bn £1.4bn • 37% of customers now shop online or multi-channel3 • Multi-channel, multi-category customers shop 5x as often and spend 6x
Slide 22: Product innovation: furniture and ranges
Continuous innovation of specification and design New lower price point More choice at great prices 50% better value than comparable products Churchgate (est. 1984) branded Constant innovation across all our New collaboration – designed for free-standing furniture product ranges sustainability and t
Slide 23: Take-back textiles, refitted stores and digital capability
Take-back textile service introduced Newly refitted Eastbourne store and Maturing capability in digital and tech into all stores Pausa kitchen café 23 INTERIM RESULTS – FY22
Slide 24: Strong returns from investments and capabilities
• Strong returns delivered by investments we are making and the capabilities we are building • Capacity investments the result of confidence in long term growth opportunities • Digital and tech capabilities becoming well established, and we will continue to develop further • Investing in product dev
Slide 25: Strong H1 performance and outlook
• Strong H1 performance across all key metrics • H2 has started well with a strong Winter Sale • Macro-economic outlook remains uncertain • Well placed to maintain value proposition for customers • Largely own brand range with high proportion of continuity • Close collaboration with committed suppli
Slide 26: Interim Results FY22
26 INTERIM RESULTS – FY22
Slide 27: Interim Results FY22
27 INTERIM RESULTS – FY22
Slide 28: Income statement
H1 FY22 H1 FY21 Change Revenue £795.6m £719.4m £76.2m Cost of Sales (£375.9m) (£345.5m) (£30.4m) Gross Profit £419.7m £373.9m £45.8m Gross margin % 52.8% 52.0% +80 bps Operating costs (£277.0m) (£255.6m) (£21.4m) Operating profit £142.7m £118.3m £24.4m Financial income £0.9m £0.1m £0.8m Financial ex
Slide 29: Balance sheet
H1 FY22 H1 FY21 Right-of-use assets £264.4m £291.5m Other non-current assets £190.0m £196.5m Inventories £204.4m £166.9m Cash £47.7m £140.6m Other current assets £22.5m £15.3m Total assets £729.0m £810.8m Lease liabilities (£295.5m) (£322.6m) Bank loans - - Other current liabilities (£214.3m) (£226.
Slide 30: Five-year financial summary
FY17 FY18 FY19 FY201 FY21 FY21 H1 FY22 H1 Total sales £955.6m £1,050.1m £1,100.4m £1,057.9m £1,336.2m £719.4m £795.6m Total sales growth 8.5% 9.9% 4.8% (3.9%) 26.3% 23.0% 10.6% Gross margin % 48.9% 48.0% 49.6% 50.3% 51.6% 52.0% 52.8% Profit before tax2 £109.3m £102.0m £125.9m £109.1m £157.8m £112.4m
Slide 31: H1 growth versus market
Periods impacted by store closures H1 vs market: +14%pts GfK weekly homewares panel excluding Dunelm. Represents just over half of the market size as reported by GlobalData. Dunelm growth shown for comparable categories 31 INTERIM RESULTS – FY22
Slide 32: Sustainability-linked revolving credit facility
• Refinanced our revolving credit facility (RCF) in December • New £185m sustainability-linked RCF to align with our ambitions and plans for a Net Zero Pathway • Annual targets covering: • Reducing greenhouse gas emissions • Responsible cotton sourcing • Plastic packaging reduction • Provision of ta
Slide 33: Medium-term financial framework
Strong revenue growth and market share gains from multichannel approach, Sales acquiring more customers and increasing their frequency Maintain c.50% gross margin through leveraging supplier relationships, Gross margin relentless focus on sourcing and disciplined approach to promotions Invest in the
Slide 34: Purpose, ambitions and shared values
Guided by our purpose, ambitions and shared values Act like owners Keep listening and learning Long term thinking Stronger together Colleagues Climate change and environment • Best practice Covid-safe protocols maintained to protect colleagues and • Sustainability and commitment to Net Zero Pathway
Slide 35: Dunelm investment summary
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 from long-term committed
Slide 36: The Home of Homes
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