Dunelm Group Plc · LSE:DNLM
Dunelm — FY2024 Earnings Presentation
37 slides from Dunelm's earnings presentation, Sep 11, 2024
Slide 1: Annual results FY24
Annual results FY24 11 September 2024
Slide 2: Annual results FY24 agenda
Annual results FY24 1 Introduction 2 Financial review 3 Unlocking our full potential 4 Q&A 2
Slide 3: Introduction
Introduction Nick Wilkinson CEO 3
Slide 4: FY24: balancing growth and grip
FY24: balancing growth and grip +4.1% +6.2% 7.7% +5.1% FY23: 7.1% Total sales Active customers Volume growth Market share1 growth growth2 51.8% £205m £132m 43.5p FY23: 50.1% FY23: £193m FY23: £160m FY23: 42p Profit before Free cash Ordinary dividend Gross margin tax flow3 per share 1 GlobalData UK c
Slide 5: A unique, specialist proposition driving strong returns
A unique, specialist proposition driving strong returns Compelling runway to grow share of a large, A winning and advantaged fragmented addressable market business model: Growth Consistent track record of share gains over recent and long-term history Market leading brand Low share of a c.£24bn1 high
Slide 6: FY24: delivering for all our stakeholders
FY24: delivering for all our stakeholders Colleagues Customers Communities • Continued focus on colleague retention, • Continued to optimise Dunelm.com • 125,000 gifts donated to local good which increased to 89%1 through faster website and ‘back in stock’ causes through ‘Delivering Joy’ campaign no
Slide 7: Confident in future market share gains
Confident in future market share gains • Our vision is to be the UK’s most trusted and valuable brand for homewares and furniture 10% 7.7% • Market share gains continue across all categories1, including those where Dunelm 5.0% share is already mid-teens • Confident the current consumer environment p
Slide 8: Financial review
Financial review Karen Witts CFO 8
Slide 9: Financial summary
Financial summary FY24 FY23 YoY Sales £1,706.5m £1,638.8m +4.1% Gross margin 51.8% 50.1% +170 bps Operating cost % sales 39.3% 38.0% +130 bps Profit before tax £205.4m £192.7m +6.6% Diluted earnings per share 74.4p 75.0p (0.8%) FY24 FY23 YoY Free cash flow1 £132.2m £160.4m (£28.2m) Net debt2 £55.6m
Slide 10: Driving profitable growth
Driving profitable growth Another year of profitable growth and strong cash returns underpinned by: Continued market share gains Stable operating margins • Outstanding value and choice for our customers Optimising gross margins through: • Price discipline across quality tiers • Increased customer nu
Slide 11: Volume-driven sales growth
Volume-driven sales growth FY24 FY23 YoY Total sales £1,706.5m £1,638.8m +4.1% Digital % total sales1 37% 36% +1ppt • Strong sales growth, driven by 6.2% increase in volume • Pricing broadly stable, with reduction in average item value driven by product mix • Sales growth in both store and digital c
Slide 12: Growth in market share and active customers
Growth in market share and active customers Market share +60bps vs FY23 Market share % • Further market share gains in a softer market1: • Combined homewares and furniture market share increased by +60bps to 7.7% • Sales growth outperformed the market by c.8ppts • 5-year market share increase of 270
Slide 13: Increased gross margin
Increased gross margin 52.7% 51.6% 51.2% 51.8% 50.3% 50.8% 50.1% FY20 FY21 FY22 FY23 FY24 H1 FY24 H2 FY24 FY • Strong gross margin of 51.8% • 170bps up YoY, driven by lower freight rates which have now largely annualised • Continued to offer outstanding value to customers whilst maintaining tight op
Slide 14: Further investment whilst maintaining grip on costs
Further investment whilst maintaining grip on costs • Operating cost ratio of 39.3% • Volume-driven variable cost increase of £14m • Continued inflationary headwind of >3%, mainly driven by wages • Investment in support of in-year C:S C:S 38.0% 39.3% and future growth: 38.0%Costs:Sales 39.3% Costs:S
Slide 15: PBT, interest, tax and EPS
PBT, interest, tax and EPS FY24 FY23 Financial income and expenses (£7.9m) (£6.1m) Profit before tax £205.4m £192.7m Tax (£54.2m) (£40.8m) Effective tax rate 26.4% 21.2% Profit after tax £151.2m £151.9m Basic earnings per share 74.7p 75.2p Diluted earnings per share 74.4p 75.0p • PBT of £205.4m up 6
Slide 16: Strong cash generation
Strong cash generation FY24 FY23 • Working capital outflow of £18m, Operating profit £213.3m £198.8m mainly driven by timing of payables Depreciation & amortisation1 £82.0m £79.4m and impact on inventory of delayed shipping routes Working capital outflow (£17.7m) (£4.2m) Share-based payments expense
Slide 17: Track record of EPS growth and cash returns
Track record of EPS growth and cash returns Dividend history (pence per share) • Final dividend of 27.5p 100.0 91.5 77.0 82.0 78.5 • Total ordinary dividend for the 60.0 65.0 year up 3.6% to 43.5p 56.6 40.0 35.0 • Special dividend of 35p paid in 70.0 37.0 41.0 April 2024 31.5 32.0 29.5 26.5 26.0 25.
Slide 18: FY25 guidance
FY25 guidance • Timing of sector recovery remains uncertain • Sales growth to continue to be volume driven • Gross margin: • Tailwinds from freight rates now annualised • Margin expected to be 51 - 52% • Inflation of 3 – 4% continues within operating cost base • PBT margin broadly stable • Total cap
Slide 19: Unlocking our full potential
Unlocking our full potential Nick Wilkinson CEO 19
Slide 20: Unlocking our full potential as the Home of Homes
Unlocking our full potential as the Home of Homes • Evolved focus areas frame our 1. Elevate 2. Connect 3. Harness our strategic priorities and investments our product offer x with more customers x operational capabilities • Leveraging and further strengthening our key points of Developing and diffe
Slide 21: A better and bolder Lighting offer
A better and bolder Lighting offer 1 2 3 1. Elevate our product offer Value and choice • Increased choice with additional c.20% new SKUs in FY24 • Elevating all price tiers through design, to deliver outstanding value Inspiration • Ambitious approach to range development, allowing our customers to ‘
Slide 22: Accelerating growth in M2M blinds
Accelerating growth in M2M blinds 1 2 3 1. Elevate our product offer • Made to Measure represents a large market, in which we have a significant opportunity to grow share Existing heritage capability • Opportunity to elevate our product offer to fully leverage our multi-channel and expert service pr
Slide 23: Enhancing product discovery
Enhancing product discovery 1 2 3 2. Connect with more customers Reduced zero-search results • With an elevated and extended range, product Before After discovery is fundamental • Ease of shopping drives incremental gains, customers who search are up to 4x more likely to transact • Using new AI tool
Slide 24: More store openings, reaching more customers
More store openings, reaching more customers 1 2 3 2. Connect with more customers • More new superstores planned, we now • In addition, first c.5,000 sq ft inner London store expect 5 – 10 new openings per year through to open in H1 the medium term • Opportunity to reach new customers in urban • Six
Slide 25: Leveraging our supply chain
Leveraging our supply chain 1 2 3 3. Harness our operational capabilities Unique supply chain and delivery network • Ongoing continuous improvement programmes to Blend of domestic suppliers and direct maximise capacity and improve labour productivity imports • New robotic handling equipment already
Slide 26: Scaling and optimising commercial operations
Scaling and optimising commercial operations 1 2 3 3. Harness our operational capabilities • Significant progress made implementing new Our goal technology and ways of working in the core operation To scale and upgrade our commercial operations and ways of working while • Currently rolling out new f
Slide 27: Unlocking our full potential as the Home of Homes
Unlocking our full potential as the Home of Homes Clear line of sight to our next market share milestone of 10% in the medium term 1. Elevate 2. Connect 3. Harness our our product offer x with more customers x operational capabilities Using our product Developing and Leveraging our mastery to expand
Slide 28: Summary and outlook
Summary and outlook • Continue to see a challenging consumer environment, and timing of sector recovery remains uncertain • Sales growth in FY25 expected to be driven by volumes and further market share gains • Solid start to FY25, against strong comparator • Strong plans underpin confidence in FY25
Slide 29: Q&A
Q&A 29
Slide 30: Appendix
Appendix 30
Slide 31: Income statement
Income statement FY24 FY23 YoY Revenue £1,706.5m £1,638.8m £67.7m Cost of Sales (£823.2m) (£817.9m) (£5.3m) Gross Profit £883.3m £820.9m £62.4m Gross margin % 51.8% 50.1% +170 bps Operating costs (£670.0m) (£622.1m) (£47.9m) Operating profit £213.3m £198.8m £14.5m Financial income £2.0m £1.7m £0.3m
Slide 32: Balance sheet
Balance sheet FY24 FY23 29 June 2024 1 July 2023 Right-of-use assets £222.9m £231.3m Other non-current assets £186.2m £182.1m Inventories £223.0m £211.0m Cash £23.4m £46.3m Other current assets £26.5m £26.1m Total assets £682.0m £696.8m Lease liabilities (£249.6m) (£258.2m) Bank loans (£77.0m) (£75.
Slide 33: Market share growth by category
Market share growth by category 20% Homewares 2023 Furniture 2019 10% 0% Categories 1 Each bar represents a Dunelm homewares or furniture category which in total represent c.80% of total sales, mapped to GlobalData UK market sizes for the calendar year 2023 against 2019. Excludes certain Dunelm cate
Slide 34: 5-year financial summary
5-year financial summary FY201 FY21 FY22 FY23 FY24 (52 weeks) (52 weeks) (53 weeks) (52 weeks) (52 weeks) Total sales £1,057.9m £1,336.2m £1,581.4m £1,638.8m £1,706.5m Total sales growth (3.9%) 26.3% 18.4% 3.6% 4.1% Gross margin % 50.3% 51.6% 51.2% 50.1% 51.8% Profit before tax £109.1m £157.8m £212.
Slide 35: 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 27.5p Total 21.5p 25.1p 26.0p 26.5p 28.0p - 35.0p 40.0p 42.0p 43.5p Special distri
Slide 36: ESG highlights
ESG highlights Our Home • Reduced our overall Scope 1 intensity by 53%1 from our FY19 baseline despite strong sales growth of 53% over the same period. We the Planet continue to purchase 100% renewable electricity and install solar panels across our stores and sites where viable. • Increased the nu
Slide 37: Thank you
Thank you 37