Dunelm Group Plc · LSE:DNLM
Dunelm — Q2 2021 Earnings Presentation
34 slides from Dunelm's earnings presentation, Feb 12, 2021
Slide 1: Interim Results FY21
INTERIM RESULTS FY21 10 February 2021
Slide 2: Interim Results FY21 Agenda
I N T E R I M R E S U LT S F Y 2 1 • Introduction • Financial review • Looking forward • Q&A INTERIM RESULTS – FY21
Slide 3: Introduction
INTRODUCTION Nick Wilkinson - CEO INTERIM RESULTS – FY21
Slide 4: H1 Highlights
INTRODUCTION H1 HIGHLIGHTS +23.0% +111% +50bps Total sales Digital sales Gross margin growth growth1 growth £112.4m £98.0m 12.0p Profit before Free cash Interim tax flow2 dividend 1 Digital includes home delivery, Click & Collect (or Reserve & Collect before October 2019) and tablet-based sales in s
Slide 5: Stronger Together
INTRODUCTION STRONGER TOGETHER • Resilience and commitment shown across the entire Dunelm family • Doing the Right Thing for all stakeholders in challenging circumstances • Health and wellbeing of colleagues and customers remains our top priority, and the high operational standards in our stores are
Slide 6: Progressing Our Customer 1st Plans
INTRODUCTION PROGRESSING OUR CUSTOMER 1st PLANS ADVANCED OUR DIGITAL CAPABILITIES GREW PRODUCT AND BRAND AUTHORITY • Completed the re-engineering of all foundational • More newness and choice in core ranges e.g. digital micro-services: checkout, product information product from recycled materials, h
Slide 7: Outperforming the Homewares Market
INTRODUCTION OUTPERFORMING THE HOMEWARES MARKET H1 homewares Q1 Q2 market* +36.7% 30% +11.8% 40% Total sales Digital % Total sales Digital % Market growth total sales growth total sales growth 9.7% (excl. Dunelm) Period affected by store closures: % stores closed by week Dunelm 1% 5% 41% 85% 84% 84%
Slide 8: Financial Review
FINANCIAL REVIEW Laura Carr - CFO INTERIM RESULTS – FY21
Slide 9: Financial Summary
FINANCIAL REVIEW FINANCIAL SUMMARY H1 FY21 H1 FY20 YOY Sales £719.4m £585.0m +23.0% LFL sales growth +22.0% +5.6% Gross margin 52.0% 51.5% +50 bps Profit before tax £112.4m £83.6m +34.4% Free cash flow1 £98.0m £63.9m +£34.1m Net cash / (debt)2 £140.9m (£67.7m) +£208.6m Diluted earnings per share 44.
Slide 10: Sales Growth
FINANCIAL REVIEW SALES GROWTH Quarterly total sales growth 40% 20% H1 FY21 H1 FY20 YOY % Total Group £719.4m £585.0m +23.0% - (20%) Digital % total sales 1 35.0% 20.4% +14.6%pts (40%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 • Exceptional Q1 +36.7% including pent-up FY19 FY20 FY21 demand • Q2 +11.8% very stron
Slide 11: Gross Margin
FINANCIAL REVIEW GROSS MARGIN • H1 gross margin +50bps compared to H1 FY20 • Lower levels of discounted sales earlier in the half and continued sourcing gains were partially offset by provisions for reduced end of season sell through at the end of the period due to store closures • Expect H2 margin
Slide 12: Operating Costs
FINANCIAL REVIEW OPERATING COSTS • Operating cost to sales ratio 100bps better than H1 FY20 • Volume leverage as a result of strong sales growth across all channels • Investments include £3m tech annualisation and tactical supply chain capacity for doubling of peak volumes • Covid-19 and social dist
Slide 13: Cash Generation
FINANCIAL REVIEW CASH GENERATION • Very strong cash generation of £98m H1 FY21 H1 FY20 • Working capital broadly neutral but Operating profit £118.3m £87.6m expect c.£80m of working capital inflow from FY20 to reverse in H2: Depreciation & amortisation £38.8m £38.9m Working capital (outflow) / inflo
Slide 14: Shareholder Returns
FINANCIAL REVIEW SHAREHOLDER RETURNS • Reflecting strong first half performance and our confidence in the medium-term outlook, Board has decided to resume dividends • Interim dividend of 12.0 pence per share, to be paid on 9th April to shareholders on the register on 19th March 2021 • Final dividend
Slide 15: FY21 Outlook
FINANCIAL REVIEW FY21 OUTLOOK • FY outturn dependent on when stores can re-open • Stores currently closed and combined C&C/home delivery sales cover c.70% of prior year total sales • At this level of sales making a modest weekly loss • Confident we will return to strong growth upon re-opening • H2 g
Slide 16: Looking Forward
LOOKING FORWARD Nick Wilkinson - CEO INTERIM RESULTS – FY21
Slide 17: Growing Relevance in a Changing World
LOOKING FORWARD GROWING RELEVANCE IN A CHANGING WORLD CHANGING HABITS OUR CUSTOMER 1ST PLAN Creating more ‘home Turbo-charging adoption Increasing preference for lovers’ and new needs for of digital in existing and out-of-town shopping existing ‘home lovers’ new customers An intense period of innova
Slide 18: Our Ambitions & Why We Are Best Placed to Win
LOOKING FORWARD OUR AMBITIONS & WHY WE ARE BEST PLACED TO WIN AMBITIOUS ABOUT • A brand appealing to a wide range of customers, market leader in a large P R O F I TA B L E G R O W T H fragmented market, with a challenger brand mentality Grow our business for the long term, at pace but always sustain
Slide 19: Attracting More Customers
LOOKING FORWARD ATTRACTING MORE CUSTOMERS Growth in total customers1 Cohort acquired in Q4 FY20 at least as +2.0m customers over 3 years valuable as previous customers 12.5 12 months to Repeat value2 Repeat rate3 11.5 Dec-20 +4.4% despite two 50% 50% periods of store 10.5 closures 40% 40% 30% 30% 9.
Slide 20: Growing Frequency
LOOKING FORWARD GROWING FREQUENCY Our highest value customer segments make up Frequency drives customer value, and is 12% of our base but c.40% of sales characterised by cross category and cross channel shopping behaviour ACTIVE CUSTOMERS % VALUE % 60% 88% 40% 12% 24 month profiles, data indexed to
Slide 21: Our Plans – Customer
LOOKING FORWARD CUSTOMER OUR PLANS – CUSTOMER Broaden our Broaden our customer base customer base What’s next: • Develop our customer proposition at pace, especially where ‘digital’ meets ‘local & friendly’ in stores • Use our new customer data platform to scale our CRM programmes – both behavioural
Slide 22: Our Plans – Product
LOOKING FORWARD PRODUCT CUSTOMER OUR PLANS – PRODUCT Grow our product offer and authority What’s next: • Offer customers ‘value they can believe in’ as affordability and sustainability become ever more important • Help our customers ‘live well’ from home, with new desks & chairs, dinnerware, storage
Slide 23: Our Plans – Experience and Services
LOOKING FORWARD DIGITAL DELIVERY OUR PLANS – EXPERIENCE AND SERVICES Accelerate online, in-store digital & service Transform post sales delivery services sales What’s next: • Develop Click & Collect services beyond ‘contact-free’ and ‘to car’ with wider assortment (including centrally fulfilled stoc
Slide 24: Our Plans – Sustainability
LOOKING FORWARD SUSTAINABILITY OUR PLANS – SUSTAINABILITY Make Make sustainability sustainability accessible for allfor all accessible OUR COMMITMENTS ON ENVIRONMENT • Set greenhouse gas reduction targets, aligned to the 1.5°C What’s next: pathway • Committed to making sustainability accessible for
Slide 25: Summary
LOOKING FORWARD SUMMARY • Excellent progress, with strong performance significantly ahead of the market, despite our total retail offer being unavailable during lockdowns • Covid-19 effect has been to accelerate existing consumer trends and reinforce our existing strategic focus areas • Increasingly
Slide 26: Q&A
Q&A
Slide 27: Appendices
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Slide 28: Income Statement
APPENDIX INCOME STATEMENT H1 FY21 H1 FY20 Change Revenue £719.4m £585.0m £134.4m Cost of Sales (£345.5m) (£283.9m) (£61.6m) Gross Profit £373.9m £301.1m £72.8m Gross Margin % 52.0% 51.5% +50 bps Operating costs (£255.6m) (£213.5m) (£42.1m) Operating profit £118.3m £87.6m £30.7m Financial income £0.1
Slide 29: Balance Sheet
APPENDIX BALANCE SHEET H1 FY21 H1 FY20 Non-current assets £196.5m £212.1m Right-of-use assets £291.5m £281.7m Inventories £166.9m £157.4m Receivables £15.3m £11.6m Cash £140.6m - Financial instruments - £1.3m Total assets £810.8m £664.1m Current liabilites (£226.7m) (£164.6m) Non-current liabilities
Slide 30: Liquidity
APPENDIX LIQUIDITY • Net cash of £141m at H1 • £175m of approved facilities undrawn • Eligible for the CCFF scheme until March 2021 but unlikely to use Facility Limit Expiry Covenants INTERIM RESULTS – FY21 30
Slide 31: 5 Year Financial Summary
APPENDIX 5 YEAR FINANCIAL SUMMARY FY16 FY17 FY18 FY19 FY201 FY20 H1 FY21 H1 Total sales £880.9m £955.6m £1,050.1m £1,100.4m £1,057.9m £585.0m £719.4m Total sales growth 7.1% 8.5% 9.9% 4.8% (3.9%) 6.0% 23.0% Gross margin % 49.8% 48.9% 48.0% 49.6% 50.3% 51.5% 52.0% Profit before tax2 £128.9m £109.3m £
Slide 32: Dunelm ESG Highlights
APPENDIX DUNELM ESG HIGHLIGHTS Guided by our shared values Long term thinking Keep listening and learning Stronger together Act like owners Colleagues Suppliers and sourcing • One or more NEDs attend monthly National Colleague Voice • Maintained and strengthened key supplier relationships – mutual f
Slide 33: Investment Proposition: Well Positioned for Sustainable Growth
APPENDIX INVESTMENT PROPOSITION: WELL POSITIONED FOR SUSTAINABLE GROWTH Brand purpose A brand appealing to a wide range of customers, market leader in a large fragmented market, with a challenger brand mentality Customer offer A distinctive and specialist product portfolio - offering quality, value
Slide 34: Thank You
TH AN K YOU