Dunelm Group (DNLM) H2 2024 earnings summary

Executive summary

• Achieved total sales growth of 4.1% year-over-year to £1,706.5m, outperforming a declining market and increasing market share to 7.7% with active customer growth of 5.1%.

• Profit before tax increased 6.6% to £205.4m, driven by gross margin expansion to 51.8%.

• Maintained operational discipline and resilient business model, balancing growth with cost control and efficiency initiatives.

• Continued strong cash returns to shareholders, with £158m paid in dividends, including a special dividend of 35p.

• Ongoing investment in product development, digital capabilities, store expansion, and sustainability initiatives, including SBTi-validated carbon targets.

Financial highlights

• Revenue grew to £1,706.5m (+4.1% year-over-year), with gross margin up 170bps to 51.8%.

• Profit before tax reached £205.4m, with PBT margin at 12.0%.

• Free cash flow was £132.2m, with a 62% profit-to-cash conversion rate, impacted by higher tax and capex.

• Net debt increased to £55.6m, with capex of £40m supporting new stores and refits.

• Ordinary dividend per share up 3.6% to 43.5p, plus a special dividend of 35p paid in April 2024.

Outlook and guidance

• FY25 sales growth expected to remain volume-driven, with continued market share gains and a target of 10% share medium term.

• Gross margin anticipated between 51%-52%, with operating cost inflation of 3%-4% mainly from wage pressures.

• Capex guidance of £50m-£60m, including 5-10 new superstore openings and the first inner London store.

• Effective tax rate expected to be 50-100bps above the 25% headline rate.

• Focus remains on operational efficiency, productivity, and investment in growth and digital.