Dunelm Group Plc · LSE:DNLM
Dunelm — H1 FY23 Earnings Presentation
33 slides from Dunelm's earnings presentation, Feb 15, 2023
Slide 1: The Home of Homes: Interim results FY23
The Home of Homes Interim results FY23 15 February 2023
Slide 2: Interim Results FY23 agenda
Interim Results FY23 1 Introduction 2 Financialreview 3 Seizing the opportunity Aon
Slide 3: Introduction
Introduction
Slide 4: H1 FY23 headline results
+5% +43% +160bps +5.7% Homewares Active Total YoY sales Total 3YoY market share customers YoY growth sales growth1 YoY growth2 growth3 51.1% £117m £102m 55p FY22 H1: 52.8% FY22 H1: £141m FY22 H1: £106m Ordinary: 15p Special: 40p Interim and Profit before Gross margin Free cash flow4 special tax divi
Slide 5: Active customers and shopping frequency
1 Unique active customers who have transacted at least once in the calendar year. Management estimates using Barclays data 2 Number of visits per retained customer in the calendar year. Retained customers defined as those who have shopped with Dunelm in both the reported calendar year and previous c
Slide 6: Strong operational grip and advantaged business model
Opened December 2022 , 15,000 sq ft sales area • Strong operational grip: • Tight commercial discipline • ‘Keep It Simple’ business principle • ‘Making Every Pound Count’ mindset • Advantaged business model: • Strong brand with broad appeal, addressing an audience of ‘home-lovers’ Customers and coll
Slide 7: Financial review
Financial review Karen Witts CFO
Slide 8: H1 FY23 financial summary
H1 FY23 H1 FY22 YoY Sales £835.0m £795.6m +5.0% Gross margin 51.1% 52.8% -170 bps Operating cost % sales 36.6% 34.8% +180 bps Profit before tax £117.4m £140.8m -16.6% Diluted earnings per share 45.8p 55.4p -17.3% Free cash flow1 £102.1m £106.3m -£4.2m Net cash2 £18.2m £47.7m -£29.5m Ordinary dividen
Slide 9: Sales performance and market share
H1 FY23 H1 FY22 YoY Total sales £835.0m £795.6m +5.0% Digital % total sales 1 34% 33% +1ppts Homewares market share2 10.8% 9.2% +1.6ppts Furniture market share2 2.1% 1.9% +0.2ppts • Strong growth rates during comparable weeks throughout the half3 • Good response to ‘Winter Warm’ and Christmas ranges
Slide 10: Gross margin
• Healthy gross margin of 51.1% • 30bps headwind from the timing of the Winter Sale • Expect lower gross margin in H2 as usual due to two Sale events • Good visibility of H2 costs; full year margin still expected to be c.50% INTERIM RESULTS FY23 10
Slide 11: Operating costs
• Operating cost:sales of 36.6%: • FY23 benefits from Winter Sale timing • FY22 unusually low due to strong store sales • Inflation mainly driven by pay increases (energy a small proportion of operating costs) 34.8% Cost:sales 36.6% Cost:sales • New stores and annualised impact of FY22 supply chain
Slide 12: Profit before tax to earnings per share
H1 FY23 H1 FY22 Financial income and expenses (£4.4m) (£1.9m) Profit before tax £117.4m £140.8m Tax (£24.4m) (£27.4m) Effective tax rate 20.8% 19.5% Profit after tax £93.0m £113.4m Basic earnings per share 46.1p 55.9p Diluted earnings per share 45.8p 55.4p • Financial income and expenses included a
Slide 13: Cash flow and free cash flow
• Strong cash generation with free H1 FY23 H1 FY22 cash flow: operating profit ratio of 84% (H1 FY22: 74%) Operating profit £121.8m £142.7m • Stable working capital (H1 FY22 Depreciation & amortisation1 £38.9m £38.1m outflow due to stock build) Share-based payments expense £2.0m £3.2m Net movement i
Slide 14: Dividend history and capital policies
Dividend history (pence per share) • Significant returns to shareholders over last 10 years • Total dividends paid of c.£1bn • Ordinary dividend CAGR of 11% • Interim dividend of 15p, an increase of 7.1% compared to FY22 • Special dividend of 40p to return to target net debt range and Capital and di
Slide 15: Outlook
• Whilst customers have been resilient to date, the consumer outlook remains unpredictable • Continue to expect FY gross margin of c.50% • Further inflationary pressures and investment in capability in H2 partially offset by lower stockholding costs • FY capex c.£20-25m, depending on timing of new s
Slide 16: Seizing the opportunity
Seizing the opportunity nson Nick Wilki
Slide 17: Dunelm market share by category
Dunelm market share by category1 Where we are today • Combined homewares and furniture market of c.£23bn • Current combined market share c.7% The opportunity • Significant runway to increase market share • Growth opportunities in all of these c.15 categories c.2% ≤5% c.10% >11% • Ambitious, confiden
Slide 18: Three priorities to drive profitable and sustainable growth
Our plan is to become our customers’ 1st choice for home Three priorities to drive profitable and sustainable growth 1. Strengthening our customer offer, especially in choice and value 2. Digitalising the total business 3. Evolving our marketing into a cost-effective ecosystem INTERIM RESULTS FY23 1
Slide 19: Strengthening customer offer in choice and value
• Customers are looking to be ‘savvy’ and are seeking value across all price / quality tiers • ‘Product mastery’ capabilities continue to be built across our supplier base, and in our design, sourcing, and sustainability teams Olney sideboard, new self-assembly furniture range offering savings compa
Slide 20: Digitalising the total business
Up to 2020 2020 – 2022 2023 onwards Catching up Scaling up Building & Optimising Launched new digital platform in Started investing in capability Continuing to build capability October 2019 across five Focus Areas: and starting to leverage • Built front-end digital systems • Data and insight • Capab
Slide 21: Digital customer offer and efficiency initiatives
LAST 6 MONTHS NEXT 12 MONTHS MORE PAYMENT OPTIONS HIGHER ‘PERFECT ORDER’ RATES online with Apple Pay and ‘Pay in 3’ shorter lead times, fewer split deliveries & better comms CUSTOMER MORE CONVENIENT DELIVERY OPTIONS MORE PAYMENT OPTIONS OFFER with parcel shop collections trial in London and Midlands
Slide 22: Evolving marketing into a cost-effective ecosystem
• We have evolved our brand, digital, and local marketing capabilities over recent years Customer data platform takes shape • Customer data platform in place • Improving cross-channel profile matching and enriching our single customer view • Starting to leverage this data to enable more personalised
Slide 23: Summary and outlook
• Further growth in customer numbers, frequency and market share • Strong performance in the first half and a strong Winter Sale • Whilst customers have been resilient to date, the consumer outlook remains unpredictable • Our expectations for FY23 PBT remain unchanged1 • Significant and exciting mar
Slide 24: Annual Results FY22
ANNUAL RESULTS FY22 24
Slide 25: Annual Results 2022
ANNUAL RESULTS 2022 25
Slide 26: Income statement H1 FY23
H1 FY23 H1 FY22 YoY Revenue £835.0m £795.6m £39.4m Cost of Sales (£408.0m) (£375.9m) (£32.1m) Gross Profit £427.0m £419.7m £7.3m Gross margin % 51.1% 52.8% (170) bps Operating costs (£305.2m) (£277.0m) (£28.2m) Operating profit £121.8m £142.7m (£20.9m) Financial income £0.2m £0.9m (£0.7m) Financial
Slide 27: Balance sheet
H1 FY23 H1 FY22 FY22 31 December 2022 25 December 2021 2 July 2022 Right-of-use assets £241.9m £264.4m £248.5m Other non-current assets £188.4m £190.0m £192.3m Inventories £233.4m £204.4m £223.0m Cash £40.2m £47.7m £30.2m Other current assets £34.6m £22.5m £43.9m Total assets £738.5m £729.0m £737.9m
Slide 28: Five-year financial summary
FY18 FY19 FY201 FY21 FY22 FY22 H1 FY23 H1 (52 weeks) (52 weeks) (52 weeks) (52 weeks) (53 weeks) Total sales £1,050.1m £1,100.4m £1,057.9m £1,336.2m £1,581.4m £795.6m £835.0m Total sales growth 9.9% 4.8% (3.9%) 26.3% 18.4% 10.6% 5.0% Gross margin % 48.0% 49.6% 50.3% 51.6% 51.2% 52.8% 51.1% Profit be
Slide 29: Dividend per share history
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Ordinary dividend per share Interim 4.5p 5.0p 5.5p 6.0p 6.5p 7.0p 7.5p - 12.0p 14.0p 15.0p Final 11.5p 15.0p 16.0p 19.1p 19.5p 19.5p 20.5p - 23.0p 26.0p n/a Total 16.0p 20.0p 21.5p 25.1p 26.0p 26.5p 28.0p - 35.0p 40.0p n/a Special dividend per s
Slide 30: Cash flow and net cash movements
1 Purchase of treasury shares is shown net of proceeds from exercise of share options INTERIM RESULTS FY23 30
Slide 31: Dunelm investment case
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 32: Colleagues and communities
Colleagues • Enhanced financial wellbeing support, including 1-1 meetings with manager and education via a Cost of Living hub on our intranet site. We offer interest free salary advance and a well-resourced colleague support fund • Thriving community of mental health first aiders covering every site
Slide 33: Thank you