Slide 1: Annual Results FY21
Dunelm) The Home of Homes Annual Results FY21 8 September 2021
Slide 2: Annual Results FY21 agenda
Annual Results FY21 * — Introduction * FY21 Financial Review * 1st Choice for Home * Investing for Growth ° Q&A
Slide 3: Introduction
3 ANNUAL RESULTS – FY21
Slide 4: FY21 key performance highlights
+26.3% +115% +8.5% +160bps Active Total sales Digital sales Market share customer growth growth1 growth3 growth2 £157.8m +130bps £108.5m 100p Profit before Gross margin Free cash flow4 Total dividends tax increase 1 Digital includes home delivery, Click & Collect (or Reserve & Collect before October
Slide 5: Stakeholder highlights: colleagues, customers, community, shareholders
• Created >700 new jobs1 • Improved experience and • £1.3m raised for Macmillan during satisfaction across all digital our partnership • Received second ‘thank you’ channels bonus • Launched a new partnership with • Maintained high standards and Mind, chosen by colleagues • Focus and progress on inc
Slide 6: Digital platform investment and progress
• Launched new digital platform in October 2019 and continued to invest in capabilities and proposition • Platform enabled us to rapidly scale in response to increased customer demand • Continued to improve customer experience and optimise organic search and paid marketing • Digital embraced by cust
Slide 7: Digital transition enhanced market leading position
Digital transition has enhanced our market … and is enabling us to attract more leading position… customers and increase their frequency • A distinctive and specialist product portfolio - offering quality, value and style – largely own brand and sourced from long-term committed suppliers Revenue • A
Slide 8: Net zero commitment and science based targets
• Net zero commitment integrated into company purpose, ambitions, plans, measures and management incentives • Science based targets - absolute reduction of 50% in scope 1 and 3 carbon emissions by 2030 and commitment to purchase only renewable electricity (scope 2)1 • Supporters of Textiles 20302 an
Slide 9: FY21 Financial Review
FY21 Financial Review Laura Carr - CFO ANNUAL RESULTS - FY21
Slide 10: FY21 financial summary
FY21 FY20 YOY Sales £1,336.2m £1,057.9m +26.3% Gross margin 51.6% 50.3% +130 bps Operating cost % sales 39.1% 39.4% (30) bps Profit before tax £157.8m £109.1m +44.6% 1 Free cash flow £108.5m £174.7m (£66.2m) 2 Net cash / (debt) £128.8m £45.4m +£83.4m Diluted earnings per share 62.9p 42.9p +46.6% Tot
Slide 11: Sales outperformed the market when fully open
We significantly outperformed the market FY21 FY20 YOY when we were fully open Total sales £1,336.2m £1,057.9m +26.3% 40% Periods impacted by store closures Digital % total sales 1 46% 27% +19%pts 20% Homewares market share2 9.1% 7.5% +1.6%pts - • Digital sales1 of £616m, +115% YoY (20%) • Strong gr
Slide 12: Gross margin up 130bps
• Gross margin +130bps compared to FY20 • Lower levels of promotional activity throughout the year • Smaller Winter Sale due to store closures • Summer Sale delayed into FY22 • In FY22 expect margin to decrease c.50-75bps as trading calendar normalises • Significant raw material and freight price in
Slide 13: Operating costs to sales ratio
• FY21 operating cost to sales ratio 30bps better than FY20, both periods impacted by Covid-19: • Higher costs to serve (mainly stores) to ensure colleague Cost: sales Cost: sales and customer safety 39.4% 39.1% Cost: sales 39.1% • FY20 one off benefits included JRS monies and other lockdown savings
Slide 14: Cash flow and net cash
• Strong cash generation despite FY21 FY20 £35m working capital outflow as Operating profit £166.4m £116.0m stockholding returned to more Depreciation & amortisation £80.8m £80.2m normal levels Working capital (outflow) / inflow (£35.0m) £80.1m • Total outflow lower than anticipated Share-based paym
Slide 15: Capital and dividend policy
• Returning to our published capital and dividend policies but maintaining a prudent approach to leverage given the macro-outlook • Final dividend proposed of 23.0 pence per share, total ordinary dividend of 35.0 pence per share reflecting strong performance and confidence in the future • Special di
Slide 16: 1st Choice for Home
16 ANNUAL RESULTS – FY21
Slide 17: Renewed purpose and six focus areas
• A renewed purpose as we emerge from the pandemic • Aspirational about the ‘comfort & security’ of home and the ‘respect & inclusion’ needed to feel at home • Guides us to be a progressive, values-led organisation embracing change and learning • Investing in our proposition and capabilities in six
Slide 18: Range development
Today How we will develop further • Range development with more choice, better value, new • Comprehensive range of collections and new product brands e.g. Churchgate c.50,000 mainly exclusive SKUs • Choice across price tiers and • Extending range in new and developing categories styles • Introducing
Slide 19: Delivery and services development
Today How we will develop further • Increasing delivery capacity and perfect order rates • Standard and express home • Increasing range of furniture available through own delivery network with convenient delivery • Own high-quality home delivery service for ‘heavy & • Increasing breadth of products
Slide 20: Digital and store development
Today How we will develop further • Releasing insight-driven online enhancements powered by • Good online experience for digital and data capabilities speed, simple search, checkout and basic account features • Building a single view of our customers across channels to • 175 stores offering personal
Slide 21: UK homewares and furniture market
• UK homewares and furniture combined market size >£25bn1 • Market recovered back to FY19 levels in FY21 • Potential inflationary tailwind in short to medium term • Market predicted to grow low single digits over Revenue coming years • Increasing customer focus on home - from functional needs to ‘wh
Slide 22: Customer growth and frequency runway
Growth in total customers1 Frequency runway from cross category and cross channel shopping +8.5% growth Multi-category, multichannel customers in FY21 shop ~5x as often and spend ~6x as much +channel Growth in digital and multichannel customers2 +category +106% growth in FY21 1 Unique active custome
Slide 23: Investing for growth
23 ANNUAL RESULTS – FY21
Slide 24: Investing for growth
Investing for growth Laura Carr - CFO
Slide 25: Track record of growth and shareholder returns
• Long-term track record of profitable growth, strong cash generation and shareholder returns • Since IPO in 2006, sales have grown by 10% CAGR and returned £1.1bn cash to shareholders • Recent digital investments have driven profitable growth and market share outperformance • As business model cont
Slide 26: Investment areas and capex levels
• Capex levels of ~£30-40m p.a. in the medium term (excluding any freehold acquisition opportunities) • Expect to maintain operating cost:sales ratio at pre-pandemic levels Supply chain Technology • • Expanding teams in Digital and Data engineering (opex) • Upgrading back end systems and • infrastru
Slide 27: 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 28: FY22 outlook
• Sales: expect another year of good growth; noting quarterly volatility due to strong comparatives in Q1 and Q4 and closures in Q2 and Q3 • Gross margin: decrease of 50-75bps as trading calendar normalises; sourcing benefits and pricing increases expected to mostly offset freight and raw materials
Slide 29: Summary and current trading
• Strong performance across all key metrics in FY21 • Macro-economic environment remains uncertain and dynamic, although we are well placed to manage these challenges • Encouraging current trading: growth against strong comparative and continued market share outperformance • Our latest FY22 expectat
Slide 30: Q&A
30 ANNUAL RESULTS – FY21
Slide 31: Appendix
31 ANNUAL RESULTS – FY21
Slide 32: Income statement
FY21 FY20 Change Revenue £1,336.2m £1,057.9m £278.3m Cost of Sales (£647.3m) (£525.5m) (£121.8m) Gross Profit £688.9m £532.4m £156.5m Gross Margin % 51.6% 50.3% +130 bps Operating costs (£522.5m) (£416.4m) (£106.1m) Operating profit £166.4m £116.0m £50.4m Financial income £0.1m £0.4m (£0.3m) Financi
Slide 33: Balance sheet
FY21 FY20 Right-of-use assets £262.0m £283.3m Other non-current assets £189.1m £203.9m Inventories £172.4m £118.2m Cash £128.6m £90.0m Other current assets £14.6m £20.6m Total assets £766.7m £716.0m Lease liabilities (£293.3m) (£314.4m) Bank loans - (£44.6m) Other current liabilities (£186.9m) (£179
Slide 34: Net cash and facilities
• Net cash of £128.8m • £175m of approved but undrawn facilities Facility Limit Expiry Covenants × × ANNUAL RESULTS – FY21 34
Slide 35: Five-year financial summary
FY17 FY18 FY19 FY201 FY21 Total sales £955.6m £1,050.1m £1,100.4m £1,057.9m £1,336.2m Total sales growth 8.5% 9.9% 4.8% (3.9%) 26.3% Gross margin % 48.9% 48.0% 49.6% 50.3% 51.6% Profit before tax2 £109.3m £102.0m £125.9m £109.1m £157.8m Free cash flow3 £12.8m £51.0m £152.8m £174.7m £108.5m Net cash
Slide 36: Colleagues and suppliers shared values
Guided by our purpose, ambitions and shared values Act like owners Keep listening and learning Long term thinking Stronger together Colleagues Suppliers • Over 700 new roles created in FY21 • Maintained and strengthened key supplier relationships, delivering • Committed to 6 BRC pledges on inclusion
Slide 37: Investment case 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 38: Our plan on a page
Appendix Plan ona Page Our plan to become our Customers’ 1st choice for home eee OUR PURPOSE To help create thejoy) of truly feeling at home. Now and for the generations to come. Truly feeling at home is one of the greatest joys in life. We want to help find ways to make every day home life beiter f
Slide 39: Our proposition and focus areas
Appendix Plan ona Page OUR PROPOSITION AND FOCUS AREAS Product Seniices that are great value, with choice, that help from inspiration to style, quality & sustainability delivery, fitting and take-back oO 1 2 3 Sustainability Product Customer Shopping Development Understanding Experience Offer the be
Slide 40: Dunelm The Home of Homes
Dunelm The Home of Homes