Dunelm Group (DNLM) Strategy update summary

Strategic Growth Ambitions and Plan

• Launching a three-year, self-funded growth plan targeting sustainable mid- to high single-digit sales growth by leveraging market leadership, expanding reach, and capturing more customer wallet share through both digital and store acceleration.

• Plans to remove £100m of unproductive costs by FY29, reinvesting in capability, simplification, automation, and technology to drive productivity and efficiency.

• Focuses on three growth drivers: becoming the homeware specialist for everyone, delivering seamless omnichannel experiences, and transforming organizational capabilities for sustainable growth.

• Identifies up to 10 new store openings per year, with over 50 store renewals by FY28, targeting underpenetrated markets and minimal cannibalization risk.

• Emphasizes customer segmentation, loyalty, and data-driven personalization to increase repeat visits and share of wallet.

Operational and Digital Transformation

• Will rationalize SKUs, optimize store layouts, and simplify product ranges, freeing up to 25% of space for more productive categories and inspirational merchandising.

• Accelerates digital investment, including app enhancements, AI-driven search, and social commerce, aiming for higher conversion and customer engagement.

• Omnichannel shoppers show highest retention and spend; app users spend 40% more per checkout than non-app users.

• Store renewals and refits focus on improving flow, navigation, and customer experience, with minimal disruption and quick rebound in sales.

• Supply chain automation, RFID deployment, and technology partnerships are expected to drive efficiency and support future growth.

Financial Guidance and Capital Allocation

• Targets adjusted PBT margin of ~11% and ROCE of ~30% throughout the investment phase, maintaining sector-leading returns.

• Plans £125m incremental CapEx over three years, mainly for new stores, renewals, supply chain, and technology, funded by operational cash flow and cost savings.

• Expects £30m–£40m of non-recurring spend over two years for foundational systems and restructuring, treated as adjusting items.

• Maintains a disciplined capital allocation policy, prioritizing growth investment, a growing ordinary dividend, and net debt/EBITDA of 0.2x–0.6x.

• Dividend cover expected to be slightly below the 1.75x–2.25x target during the plan period due to increased investment.