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Annual Report and Accounts for the period ended 30 June 2018

At Dunelm, we love homes and are just as obsessed by the products that go in them. We’re the UK’s No. 1 Homewares retailer offering our customers a wide range of products to enhance every room in their home. We focus on style, quality and value and are always working hard to make our customers’ lives a little easier.

Highlights

Revenue

£m

+9.9%

(2017: +8.5%)

EBITDA*

£m

-1.8%

(2017: -7.8%)

* EBITDA is presented before exceptional costs.

Dividend Per Share

Pence

+1.9%

(2017: +3.6%)

Operational Highlights

  • Growth in unique customers numbers both online (+18%), and in-store (+5%)*
  • Integration of Worldstores product catalogue and supply chain completed
  • Continued gain in Homewares market share to 8.1% (2017: 8.0%)†, further strengthening number one position
  • Improvement in customer satisfaction scores across all channels
  • Opening of ten new superstores in the year (including one relocation) and completion of six new format refits
  • Product range grew in breadth and quality with 90% of customer reviews of products online being rated four or five stars

Financial Highlights

  • Sales growth of 9.9% including 1.0% like-for-like (LfL) growth in stores and an online LfL sales increase of 37.9%
  • EBITDA of £139.6m (pre exceptional items), down 1.8% year-on-year reflecting investment for growth and consolidation of Worldstores trading losses
  • PBT of £102.0m (pre exceptional items), inclusive of an estimated £8.4m of Worldstores operating losses in year which will not repeat in future years 
  • PBT of £93.1m including £8.9m of exceptional costs relating to the integration of the Worldstores businesses
  • £44.0m capital investment in year including digital technology development, new and refit stores and a new purpose-built manufacturing centre for our made-to-measure offer
  • Improvement in free cash flow year-on-year to £52.9m (FY17: £14.2m)
  • 1.9% increase in full year dividend to 26.5 pence per share

Performance

Goal One

Reaching new customers with our brand

Strategic Objective

Increase the number of shoppers at Dunelm

What we're doing

An integrated programme to build brand awareness, consideration and acquisition

  • Brand building campaign begins in September 2018 with TV sponsorship and advertising
  • Performance marketing programmes will accelerate under one brand
  • Developing own channels and unique content (#mydunelm, Salesforce capabilities, emails)
  • Store roll-out continues with a long term target of around 200 stores in the UK
  • Product PR and Influencer programme gaining critical mass

Goal Two

Create new reasons for customers to shop with Dunelm

Strategic Objective

Increase customer visit frequency

What we're doing

Improving our product proposition by offering the best choice, quality, value and style

  • Cultivate win/play/show category ranging strategies including seasonal
  • Buy more promotional product to complement core ranges and increase newness and value
  • Use drop-ship capabilities to develop online range, especially in soft furnishings
  • Build differentiated offer in selected furniture categories (e.g. Fogarty mattresses)

Goal Three

Easy and inspiring multichannel shopping for our customers

Strategic Objective

Increase conversion and basket size

What we're doing

Be the leading multichannel brand in homewares for customer experience

  • Introduce our new web platform including Click & Collect in Q3 FY19
  • All range available in-store through customer hosts and mobile tablet selling equipment
  • Refits to develop inspiration and ease of shopping
  • Technology teams set up for agile development from Q1 FY19

Goal Four

Simple and low cost – good housekeepers

Strategic Objective

Improve operating leverage and efficiency

What we're doing

Developing our business to be agile and scalable. Instilling the good housekeepers mindset

  • Simplify to one brand, one platform (for Tech and Supply Chain efficiency)
  • Develop agile and scalable systems and processes
  • Improve internal controls around retail basics
  • Attack third party costs (sourcing, procurement, value engineering)
  • Re-engineer non-customer facing activities in store

Goal Five

A great place to work for colleagues

Strategic Objective

Improve customer conversion efficiency

What we're doing

Retaining our culture as we embrace a digital future

  • Restructured commercial teams to increase pace and customer ownership
  • Always-on colleague listening to enhancing our ability to engage with and make continual improvements for our colleagues
  • Restructured technology team to enhance technical product ownership and development agility and skillset
  • Appointed a designated non-executive Director to our Colleague Council to improve engagement with the Group Board

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Quick Links

Business Model

At Dunelm, our purpose is to help everyone create a home they love

Will Adderley Deputy Chairman

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Our Marketplace

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Our Vision & Strategy

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Key Performance Indicators

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Sustainability

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