Homewares retailer Dunelm reports another strong year, maintaining its record of growing sales and profit every year since IPO in 2006
The group reports continued delivery across all three areas of the growth strategy:
- In-store like-for-like growth of 1.0% (52 week basis);
- 23.2% growth in home delivery sales (52 week basis), now accounting for 7.0% of total revenue (FY15: 6.1%);
- Six new openings in the year (including two relocations), increasing footprint to 152 superstores; nine new stores contractually committed.
The group also reports progress on eight key initiatives to support the growth strategy and to build a world class operating model in a low cost environment:
- New warehouse opened in Stoke, doubling capacity and providing cost reduction opportunities
- Improved productivity within stores to reinvest into helping customers, improving service, driving sales and to mitigate the cost of introducing the National Living Wage
- Reduction in stock holding by £16.5m (12.4%) through improved retail disciplines
The group reports strong free cashflow, up 26.9% to £110.4m and a special distribution during the period of 31.5p per share (£63.8m).
The recommended final dividend of 19.1p per share (FY15: 16.0p), increasing the full year dividend to 25.1p (FY15: 21.5p), an increase of 16.7% for the full year.
Chief executive John Browett said: "The business has performed well over the year. Shoppers tell us that they genuinely appreciate the unrivalled depth and value of the Dunelm homewares offer. This has meant we have further cemented our leading position through market share gains, driving sales and profits growth, and increasing returns to shareholders, including a 16.7% increase in total ordinary dividends and a special distribution of 31.5p per share.
"My first year as Chief Executive has been extremely busy and we're working hard on initiatives across the business. Not least, we are investing in our stores to make them much easier to shop, whilst making sure our vast range of product maintains the value for money proposition which lies at the very heart of the Dunelm offer.
"We remain particularly focused on extending the Dunelm offer to more customers and have opened six new superstores in the year. This will be ramped up in the current year with nine planned openings, three of which are in the London area where we are excited by the clear opportunity for growth.
"We continue to outperform the homewares market, and despite potential challenges to the economy over the coming months and the dampening effect on footfall of recent hot weather, we believe that Dunelm's competitive position can come into its own, and are confident of continuing to deliver our growth ambitions."
Group revenue for FY16 was £880.9m (FY15: £835.8m), an increase of 5.4% for the full financial year and 7.1% on a 52 week basis. Like-for-like ('LFL') sales grew by 2.5% on a 52 week basis as a result of growth in both in-store LFL sales (+1.0%) and Home Delivery sales (+23.2%). Over the financial year as a whole, Home Delivery sales represented 7.0% of total business (FY15: 6.1%).
Gross margin increased by 60 basis points to 49.8% (FY15: 49.2%). Gross margin in FY15 was impacted by a high level of markdown needed to clear excess stocks (particularly furniture).
Operating costs in FY16 grew by 7.1% compared with the prior year, an increase of £20.5m, or by 9.1% on a 52 week basis, an increase of £25.7m.