Half-year Results

Dunelm Group plc ("Dunelm" or "the Group"), the UK's leading homewares retailer, today announces its interim results for the 26 weeks to 28 December 2024.

Highlights

• Good performance in a challenging environment, again underpinned by the quality of our customer proposition and advantaged business model
• Sales growth of 2.4%, driven by volume, with total sales increasing to £894m (FY24 H1: £872m)
• Another strong digital performance, with 39% of total sales generated through digital channels (FY24 H1: 36%)
• Market share increased to 7.8%, up 30bps on a calendar year basis4
• Growth in active customers of 4.3% in 20245
• Further progress with our strategic priorities: elevate our product offer; connect with more customers; and harness our operational capabilities
• Continued to improve our digital proposition, whilst expanding our store portfolio to inner London, and also Ireland via our Home Focus acquisition
• Over 270,000 gifts donated to local communities through our record-breaking 'Delivering Joy' campaign, more than double last year

Financial highlights

• Delivered a strong gross margin of 52.8% (FY24 H1: 52.7%), up 10bps, whilst maintaining our value proposition
• Tight operational grip and productivity initiatives partly offsetting inflationary impacts and investment
• Profit before tax ("PBT") up 0.2% to £123m (FY24 H1: £123m)
• Diluted earnings per share ("EPS") up 0.9% to 45.0p (FY24 H1: 44.6p)
• Free cash flow of £169m (FY24 H1: £91m), including £88m timing benefit2
• Strong cash generation and confidence in future plans driving shareholder returns:
• Interim dividend of 16.5p (FY24 H1: 16.0p); an increase of 3.1%
• Special dividend of 35.0p to return to target leverage range of 0.2× - 0.6× net debt : annualised EBITDA6,7

Current trading and outlook

• We remain confident in our advantaged business model and are progressing with our strategic plans, whilst staying mindful of a challenging sector backdrop and a cautious consumer
• We are encouraged by early trading in the second half
• Our PBT expectations for the full year are unchanged and in line with consensus8

Nick Wilkinson, Chief Executive Officer, commented:

"Our performance over the first half reflects the growing attraction of the Dunelm offer for a wide range of customers, and the quality and resilience of our business model. Amidst a challenging backdrop for retail, those attributes have helped us deliver increased sales, a strong gross margin, and both customer and market share growth.

"We have also pressed ahead with our strategy. Whether our customers prefer maximalist prints or neutral plains, the elevation of our product is apparent through the diverse range of styles on offer for all tastes, with quality once again endorsed through the awarding of a Royal Warrant to our Dorma brand. Our thriving total retail system is connecting that product with more customers, and we saw further growth in our increasingly personalised digital channels, as well as some exciting firsts for our store portfolio; we arrived in inner London at Westfield, acquired 13 stores in Ireland, and we will open our 200th store in the second half.

"As ever, whilst pleased with our results, we are eager to move faster and with greater purpose. Customers love Dunelm, but we can grow to become a destination for more customers, across more categories, more of the time. With our dedicated colleagues, who have shown incredible adaptability in a difficult trading environment, this gives us a renewed confidence in unlocking our full potential as The Home of Homes."

1 Digital includes home delivery, Click & Collect and tablet-based sales in store

2 Free cash flow is defined as net cash generated from operating activities less capex (net of disposals), net interest paid (including leases) and loan transaction costs, and repayment of principal element of lease liabilities. A reconciliation of operating profit to free cash flow is included in the CFO review. Free cash flow in the half included timing benefit of £88m due to a payment in transit which cleared on the first working day of H2

3 Excluding lease liabilities. Full definition provided in the table of alternative performance measures

4 GlobalData UK combined homewares and furniture markets, excluding kitchen cabinetry and bathroom furniture, for the period January 2024 to December 2024. Prior year comparative restated from 7.6% to 7.5%

5 Year-on-year growth in unique active customers who have transacted at least once in the 12 months to December 2024. Management estimates using Barclays data

6 EBITDA defined as operating profit plus depreciation and amortisation of property, plant and equipment and intangible assets plus loss on disposal and impairment of property, plant and equipment and intangible assets plus depreciation on right-of-use assets

7 Within target range at the end of H1 after interim and special dividend commitments and excluding £88m timing benefit due to a payment in transit which cleared on the first working day of H2

8 Company compiled average of analysts' expectations for FY25 PBT is £209m, with a range of £204m to £214m

Analyst presentation:

There will be an in-person presentation for analysts and institutional investors this morning at 9.30am, hosted at Peel Hunt LLP, 100 Liverpool Street, London, EC2M 2AT, as well as a webcast and conference call with a facility for Q&A. For details, please contact hugo.harris@mhpgroup.com. A copy of the presentation will be made available at corporate.dunelm.com.

Separately today, the Group has made an announcement relating to CEO succession.

Dunelm will release its third quarter trading update on 17 April 2025.

Quarterly analysis:

52 weeks to 28 June 2025

9 Ordinary dividends plus special distributions

CHIEF EXECUTIVE OFFICER'S REVIEW

Introduction

We had a good first half in what has remained a challenging environment for the sector. Our performance was underpinned by the strength of our advantaged business model and the quality of our offer, delivering volume-driven sales growth, strong gross margins and continued progression in both customer numbers10 and market share.11

We are mindful of what has been a prolonged period of weak consumer confidence and cost inflation, and as always recognise the importance of being level-headed and disciplined. We also know from Dunelm's history that in times like this, by maintaining our customer focus and investing wisely, we can build a bigger and better business, to the benefit of all our stakeholders.

To achieve these ambitions, we are maintaining a laser focus on the customer. In a world of evolving consumer habits and an increasingly diverse range of shopping missions for the home, understanding our customers, through data and insight, allows us to develop and improve our specialist proposition. We continue to develop that proposition through our three strategic focus areas, on which I provide further detail below.

As well as responding to the consumer environment, we will continue to adapt to this period of sustained wage inflation. We have a good track record of managing cost pressures in recent years, with a clear focus on operational grip helping us to maintain stable margins. We will continue to focus on cost mitigation through tactical and operational improvements, alongside targeted investment in longer-term productivity opportunities. At the same time, our growth ambitions, and the capabilities we have built to drive them, will deliver further benefits through operational leverage. Through our unique business model, we will continue to prioritise our value proposition whilst carefully managing our 'good, better, best' range architecture. Overall, this gives us confidence in maintaining broadly stable margins going forward.

As ever, our performance would not have been possible without our dedicated colleagues. I would like to thank them all for their adaptability and commitment, and the amazing work they have been doing in their communities, as demonstrated by this year's record-breaking Delivering Joy campaign.

10 Year-on-year growth in unique active customers who have transacted at least once in the 12 months to December 2024. Management estimates using Barclays data

11 GlobalData UK combined homewares and furniture markets, excluding kitchen cabinetry and bathroom furniture, for the period January 2024 to December 2024. Prior year comparative restated from 7.6% to 7.5%

H1 Review

Sales increased by 2.4% in the first half, in a soft homewares and furniture market which has continued to see volatility in weekly trading patterns. As in recent periods, volume has continued to be the driver of our sales growth, with prices held broadly stable in the period. Our sales growth was again delivered alongside a strong gross margin, which was up 10bps year-on-year as we continued to exercise discipline in our pricing and promotional activity, whilst carefully managing our input costs.

Our operating costs:sales ratio was 38.6% (FY24 H1: 38.1%). Despite inflationary headwinds in our cost base, we have continued to invest in the business, in both growth and productivity drivers. This incremental investment in the first half was more than offset by operational productivity savings.

Overall, profit before tax was up 0.2% to £123.2m, reflecting a strong PBT margin for the first half of 13.8% (FY24 H1: 14.1%). With a normalised effective tax rate following a one-off deferred tax adjustment last year, diluted earnings per share was up 0.9% to 45.0p (FY24 H1: 44.6p).

Our strong cash generation continued in the first half, which, alongside ongoing confidence in our future plans, has resulted in the Board declaring an interim dividend of 16.5p per share (FY24 H1: 16.0p) and a special dividend of 35.0p per share.

Unlocking our full potential as The Home of Homes

Our growth opportunity can be viewed through the lens of multiple product category runways. The homewares and furniture markets comprise dozens of product categories, and in each we have significant headroom in terms of awareness, consideration and overall market share. The weighting of the opportunity, and therefore the levers we pull, differ by category. We are increasingly becoming a multi-category specialist: The Home of Homes.

Our approach to this growth opportunity is framed by our three strategic priorities: elevate our largely own brand, exclusive product; develop our channels to offer better shopping experiences which connect with more customers; and harness our operational capabilities to drive both growth and productivity. With these interconnected focus areas delivering significant compounding benefits, our sights are firmly set on achieving our medium-term milestone of 10% market share.

Elevate our product offer

Elevating our product means creating products and collections that delight and surprise our customers, alongside a relentless focus on offering them value. We do this through our 'good, better, best' product hierarchy which we have adopted across all categories and which provides a framework to manage our ranges, raising the bar on quality and choices whilst maintaining appropriate price points at all levels.

As an example, in our towels collection we are continuing to extend the range at both the 'good' and 'best' ends of our hierarchy, with nine value tiers of bath towels from the £4 'good tier' to the new £24 'best tier' to soon be launched. In the middle of this assortment is our best-selling Egyptian cotton towel, where we recently upgraded the quality with better finishing and a greater choice of longer lasting colours to offer better value. This demonstrates the way in which we elevate a core category, making multiple detailed range improvements to offer quality, choice and value to our customers.

We are also elevating through design, which is built over time with deep capabilities and expertise. In our core textile categories, that expertise is the combination of our long-term committed suppliers and our in-house design team. Dorma is an example of this, recently recognised for its quality by receiving a Royal Warrant from the King. More recently, in furniture we have built design skills in-house alongside a growing network of UK and Asia manufacturing partners and have seen strong sales growth across our collections. Our 'Beatrice' furniture range has been particularly successful, where we have been bolder in our design choices and have now extended this collection into our other sub-categories in various colourways.

We also seek out collaborations, which both inspire customers and give our products further reach, particularly for newer customers who may not have previously considered Dunelm. Our latest is with Sophie Robinson, where we have developed a unique maximalist collection which has just launched for the upcoming season. This year we are extending and elevating some of our long-term collaborations, notably with the Natural History Museum. We are also extending designs from the William Morris archive into finished products, in addition to Made-to-Measure blinds and curtains.

Connect with more customers

We are improving both the reach and customer experience of our channels, optimising each one as a part of our total retail system. Across our digital channels, we benefit from the insights we gain from millions of visits, all of which give greater direct visibility of customer behaviour, allowing for faster experimentation and adaptation. Our stores remain an integral part of the total retail system, driving awareness and engagement in their local communities, whilst playing a key role in supporting the growth in Click & Collect sales in the first half.

In digital, we have multiple examples of where we have tailored our offer for customers. In isolation these may feel small, but the aggregate impact is significant. We have recently improved the search functionality on dunelm.com through the introduction of new AI-powered tooling, and we are now expanding this capability to power more personalised customer recommendations. Social proofing is also driving conversion on the site, by helping customers to see others positively engaging with our products. We plan to expand this functionality to new use cases, with some encouraging early signs. Our digital proposition will continue to be enhanced through rigorous programmes of experimentation to accurately test incrementality, in each case ensuring that there is meaningful customer value relative to the cost to the business.

Later this year we will also be launching our first customer mobile app. Initially this will offer a transactional shopping experience, from which we will learn and develop further functionality and personalisation.

The optimisation of our channels extends to stores. In the first half we opened our first inner London store in Westfield London. As well as the store itself, the broader opportunity is to build awareness for consumers who may not have come across Dunelm before, and to drive consideration for those who may know of Dunelm, but do not currently shop with us. This means merchandising the store differently to a typical Dunelm superstore, surprising customers, demonstrating the quality and value of individual products, and showcasing the ease of coordinating across categories to create a stylish interior. We are pleased with early trading. As well as welcoming a good proportion of new customers, we are seeing strong take up of our digital offer to order for home delivery, and for Click & Collect.

We are rolling out more superstores, across both smaller and larger formats. We anticipate opening five stores in the second half of the year; in catchments we have targeted since we began rolling out superstores, in some smaller catchments we have not previously targeted, and also to infill densely populated areas where we are underrepresented.

In November we took our first step into an international market with the acquisition of Home Focus in Ireland. This gave us a portfolio of 13 small stores focused on soft textiles in high-quality locations, with a small online operation and a 'reserve in store' offer. We are pleased with the early trading of the business, and have already started selling key Dunelm lines in stores.

This acquisition is small, but gives us a good opportunity to raise the bar on the customer offer, including in time setting up our own digital platform to serve customers in Ireland. As ever, we will approach this with a view to building profitable and sustainable growth for the long term. Looking further ahead, this also gives us the opportunity to build the capability to connect our product to customers in other countries.

Harness our operational capabilities

Our operational capabilities are, first and foremost, enablers for developing a great customer proposition and driving growth. Leveraging this growth alongside our capabilities creates opportunities to yield benefits greater than simply doing what we do today more efficiently.

Click & Collect is a good example of where we can make propositional changes to benefit the customer, with the opportunity to improve efficiency as we grow. For our customers, we have significantly increased the number of lines available for customer collection in local stores - products accounting for around three quarters of our digital sales are now available for collection. Click & Collect sales grew significantly the first half and as we grow, we are learning how to become more productive, with the opportunity now to improve how and when the stock reaches our stores, and how our stores operationally manage these higher volumes.

Another example of where we have already leveraged our scale is in our digital channels, where we have increased the efficiency of performance marketing. Our growth, as well as the skills we have built in customer data, experimentation and analytics, has enabled us to optimise spend across more of the customer journey by targeting consideration earlier through paid social advertising. The continuous improvement we are making to dunelm.com also improves conversion, and thus our paid advertising efficiency.

As well as tactical efficiency improvements, we are targeting programmatic investments for longer term productivity. One example already underway is the roll out of self-serve checkouts for our customers, which are now being implemented in some of our larger stores following a successful trial. We expect these checkouts to be in over 100 stores by the end of next financial year, remodelling the store space at the same time. With the technology well developed, and labour costs rising, this programme will pay back in less than three years and delivers a solution we know appeals to many customers.

Summary and outlook

We remain confident in our advantaged business model and are progressing with our strategic plans. We are pleased with the quality of our sales growth in the first half, underpinned by higher volumes, more customers and market share gains, alongside further gross margin expansion. Overall, we have had a good first half, with profits broadly flat year-on-year in a challenging environment.

Ongoing consumer caution and sustained labour cost headwinds are continuing to impact all businesses in our sector. It is important that we face these challenges with a long-term perspective, adapting in ways that keep the customer front and centre, whilst delivering sustainable growth.

We are encouraged by early trading in the second half. Our expectations for full-year PBT are therefore unchanged and in line with consensus12.

12 Company compiled average of analysts' expectations for FY25 PBT is £209m, with a range of £204m to £214m

Nick Wilkinson

Chief Executive Officer

CHIEF FINANCIAL OFFICER'S REVIEW

Revenue

Total sales for the first half of £894m (FY24 H1: £872m) were 2.4% higher than FY24; a good performance delivered against a market backdrop that continues to be volatile amidst ongoing consumer caution. Growth in the first half continued to be driven by volume, with prices broadly stable.

The proportion of revenue from digital sales increased by 3ppts to 39%. Customers responded well to the ongoing improvements to our digital proposition, as we maintained our focus on making shopping online easier. Notably, we improved the search functionality on dunelm.com, resulting in a greater level of personalisation in search results, and a much lower level of searches returning no results. Click & Collect performed strongly in the first half, as we extended the breadth of products now available through this channel, and made more items available for collection within two hours (previously three hours) to improve the overall customer convenience of our multi-channel offer.

The breadth and relevance of our offer continues to be a key part of our customer proposition. We saw our furniture categories perform particularly well in the first half as we extended our most popular designs across a wider range of products. We also saw the benefits of our developments in Made-to-Measure window treatments, where our improving capabilities and investment in vertical integration has driven strong growth.

We are pleased with the quality of our sales growth, delivered in a furniture and homewares market that has remained soft. Our market share increased by 30bps13 year-on-year, and is now at 7.8%. We also continued to extend our customer reach and saw growth in our active customer base of +4.3%14. Encouragingly, we once again saw strong growth across our customer cohorts, with increasing customer numbers in all age groups, all geographical regions and all income groups up to £100k.

13 GlobalData UK combined homewares and furniture markets, excluding kitchen cabinetry and bathroom furniture, for the period January 2024 to December 2024. Prior year comparative restated from 7.6% to 7.5%

14 Year-on-year growth in unique active customers who have transacted at least once in the 12 months to December 2024. Management estimates using Barclays data

Gross margin

Our unrelenting focus on operational grip has again delivered a strong gross margin. For the first half, gross margin was 52.8% (FY24 H1: 52.7%), an improvement of 10bps. We have effectively managed input costs, whilst maintaining promotional discipline and prioritising our value proposition for our customers, across all value tiers.

For the full year, we now expect gross margin to be between 51.5% and 52.0%, the upper half of our previously guided range. We have good visibility of the main components of our cost of goods in the second half, and a strong plan for maintaining value for our customers.

Operating costs and income

Total operating costs were £345m (FY24 H1: £333m). Our operating costs:sales ratio was 38.6% (FY24 H1: 38.1%) in the first half, which excludes operating income of £2m (FY24 H1: nil). The increase in operating costs:sales ratio was largely driven by inflation, mainly from higher labour costs. We have continued to invest in the business, though the incremental investment in the first half was more than offset by operational productivity savings.

Our sales growth in the first half continued to be driven by volume. Associated variable costs, predominantly in our distribution network and performance marketing, were up £7m in the period. Inflation added a further £9m of cost year-on-year, largely driven by labour costs linked to higher National Living Wage rates.

We remain committed to investing in tools and capabilities to support our long-term growth. We invested an incremental £8m in the first half, the increase including manufacturing and capabilities in Made-to-Measure and investment in stores.

Our investments in the first half were more than offset by productivity gains of £11m. These included tactical initiatives delivered across the business, with particular savings from optimising store scheduling. We also saw the results of previous investments in digital capability through performance marketing, a key area of spend where we have increased efficiency at the same time as driving sales growth.

Profit before tax

Net finance costs of £5m (FY24 H1: £4m) were £1m higher year-on-year, reflecting higher underlying net debt. Finance costs included interest on IFRS 16 lease liabilities of £4m (FY24 H1: £3m).

Profit before tax in the period was £123m (FY24 H1: £123m), up 0.2% year-on-year and reflecting a broadly stable PBT margin of 13.8% (FY24 H1: 14.1%). Our FY25 PBT expectations are unchanged and in line with consensus15.

Looking ahead, we are mindful of the further increases to labour costs following the Autumn Budget announcement. In particular, the overall impact of increases to employer National Insurance Contributions from April 2025 was not anticipated. We have a good track record of delivering efficiencies to offset cost increases, and will continue to do so through both operational improvements and targeted longer-term productivity opportunities. We will drive benefits through the ongoing leverage of our scale and capabilities, and will carefully manage the architecture and pricing of our ranges whilst maintaining our overall value proposition. We are confident these levers give us the ability to deliver broadly stable PBT margins going forward.

15 Company compiled average of analysts' expectations for FY25 PBT is £209m, with a range of £204m to £214m

Earnings

Profit after tax of £92m (FY24 H1: £91m) reflects an effective tax rate of 25.6% (FY24 H1: 26.3%). This is a normalisation of the effective tax rate, in line with our historic range of 50-100bps above the headline rate, as the prior year included the impact of a one-off deferred tax adjustment. The difference between the effective tax rate and the headline rate reflected the disallowable expenditure related to property purchases and intangible asset additions. The impact of the Irish tax rate on the Group is immaterial. The effective tax rate for the full year is expected to be broadly in line with the first half.

Basic earnings per share (EPS) for the period was 45.2 pence (FY24 H1: 44.9 pence). Diluted earnings per share was 45.0 pence (FY24 H1: 44.6 pence), growing 0.9% year-on-year due to the reduction in the effective tax rate.

Cash generation and net debt

16 Including impairment and loss on disposal

17 Excluding interest on lease liabilities

18 Excluding lease liabilities

The Group continues to generate strong cash flows, with free cash flow of £169m in the first half (FY24 H1: £91m). This includes a timing benefit of £88m, due to a payment in transit which cleared on the first working day of the second half, the impact of which on our reported numbers is shown below:

We saw a £6m underlying cash inflow from net working capital in the first half, and expect a small inflow for the full year. Inventory was £229m at the half year (FY24 H1: 232m), having been well controlled throughout the year so far, reflecting roll out of our forecasting and replenishment system.

Total capital investment for the first half was £39m (FY24 H1: £20m), with the year-on-year increase due to a £22m freehold retail property acquisition, as previously guided. Other capital spend in the half included £11m on our existing store estate including six refits, and the acquisition cost of Home Focus.

We continue to expect the majority of our new store openings to be leasehold, however we have the capacity to take advantage of freehold opportunities where the returns are attractive, including in locations where we are currently underrepresented. In Greater London, one such location, we are currently in legals for a further freehold property acquisition, which if successful, would open as a Dunelm superstore in FY26. If this transaction completes, capex for the full year will be ahead of our initial guidance, at £60m - £70m.

After adjusting for the impact of timing in working capital, the underlying conversion of operating profit to free cash flow was good at 63% (FY25 H1: 72%). The variance year-on-year was primarily driven by the increase in capital investment.

Cash tax paid was £26m (FY24 H1: £25m), broadly in line year-on-year.

Total dividend payments in the period were £56m (FY24 H1: £55m). The Group ended the first half with net cash of £57m19 including the benefit of timing noted above (FY24 H1: £6m). After adjusting for the impact of working capital timing, net debt was £31m.

19 Excluding lease liabilities. Full definition provided in the table of alternative performance measures

Banking agreements

At 28 December 2024, the Group had in place a £250m unsecured revolving credit facility ("RCF"), which was undrawn at the half year end. The terms of the RCF included covenants in respect of leverage (net debt20 to be no greater than 2.5× adjusted EBITDA21) and fixed charge cover (EBITDAR22 to be no less than 1.75× fixed charges23), both of which were met comfortably as at 28 December 2024. The maturity date is September 2028 and there is an option to extend by another year at Dunelm's request, subject to lender consent. The Group also maintains £10m of uncommitted overdraft facilities.

20 Excluding lease liabilities. Full definition provided in the table of alternative performance measures

21 Adjusted EBITDA defined as EBITDA less depreciation on right-of-use assets

22 EBITDAR defined as EBITDA plus rent

23 Fixed charges are defined as net interest costs plus right-of-use asset depreciation plus rent

Capital and dividend policies

The Board policy on capital structure targets an average net debt level (excluding lease obligations and short-term fluctuations in working capital) of between 0.2× and 0.6× the last 12 months' EBITDA24. The Group's dividend policy targets ordinary dividend cover25 of between 1.75× and 2.25× earnings per share during the financial year to which the dividend relates.

The Group makes share repurchases from time to time to hold in treasury to satisfy obligations under employee share schemes. The Group held 0.9m shares in treasury as at 28 December 2024 (FY24 H1: 1.3m).

24 EBITDA defined as operating profit plus depreciation and amortisation of property, plant and equipment and intangible assets plus loss on disposal and impairment of property, plant and equipment and intangible assets plus depreciation on right-of-use assets

Dividends

Recognising our performance and ongoing confidence in the business, the Board has declared an interim ordinary dividend of 16.5 pence per share, an increase of 3.1% compared to FY24 (FY24 H1: 16.0p). The interim dividend will be paid on 8 April 2025. The ex-dividend date is 13 March 2025 and the record date is 14 March 2025.

In addition to this, the strong cash generation in the period has enabled the Board to declare a special dividend of 35.0 pence per share. The special dividend will also be paid on 8 April 2025. The ex-dividend date is 13 March 2025 and the record date is 14 March 2025. Whilst the period ended in a net cash position, excluding the working capital timing benefit of £88m, net debt of £31m represented 0.1x annualised EBITDA. After the committed dividend payments, the Group is within its target leverage range.

Principal risks and uncertainties

The Board regularly reviews and monitors the risks and uncertainties which could have a material effect on the Group's results. The principal risks and uncertainties that could lead to a material impact have not changed from those listed in the FY24 Annual Report.

A summary of the principal risks has been provided below:

Karen Witts

Chief Financial Officer

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The maintenance and integrity of the Dunelm Group Plc website is the responsibility of the directors; the work carried out by the authors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that might have occurred to the interim financial statements since they were initially presented on the website.

The directors of Dunelm Group Plc are listed in the Company's annual report for 29 June 2024. A list of current directors is maintained on the Company's website: www.corporate.dunelm.com.

By order of the board

Nick Wilkinson Karen Witts

Chief Executive Officer Chief Financial Officer

11 February 2025 11 February 2025

INDEPENDENT REVIEW REPORT TO DUNELM GROUP PLC

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Dunelm Group Plc's condensed consolidated interim financial statements (the "interim financial statements") in the Interim Results of Dunelm Group Plc for the 26 week period ended 28 December 2024 (the "period").

The interim financial statements comprise:

• the consolidated statement of financial position as at 28 December 2024;
• the consolidated statement of cash flows for the period then ended;
• the consolidated statement of changes in equity for the period then ended; and
• the explanatory notes to the interim financial statements.

The interim financial statements included in the Interim Results of Dunelm Group plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

Conclusions relating to going concern

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

PricewaterhouseCoopers LLP

Chartered Accountants

East Midlands

CONSOLIDATED INCOME STATEMENT

(UNAUDITED)

For the 26 weeks ended 28 December 2024

Other comprehensive (expense)/income:

Items that may be subsequently reclassified to profit or loss:

Karen Witts

Chief Financial Officer

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

For the 26 weeks ended 28 December 2024

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the 26 weeks ended 28 December 2024 (UNAUDITED)

1 General information

Dunelm Group plc and its subsidiaries ('the Group') are incorporated and domiciled in the UK. Dunelm Group plc is a listed public company, limited by shares and the company registration number is 04708277. The registered office is Dunelm Store Support Centre, Watermead Business Park, Syston, Leicester, Leicestershire, England, LE7 1AD.

The primary business activity of the Group is the sale of homewares in the UK, in stores and online.

The Group's financial results and cash flows are subject to seasonal trends between the first and second half of the financial period. Traditionally, revenue and profit are higher in the first half of the financial period due to the performance of seasonal lines and the timing of sale events.

These condensed interim financial statements do not comprise statutory accounts as per the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 29 June 2024 were approved by the Board of Directors on 11 September 2024 and delivered to the Registrar of Companies. The independent auditors' report on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act.

2 Basis of preparation

The interim report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 29 June 2024, which has been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards and any public announcements made by Dunelm Group Plc during the interim reporting period.

3 Going concern basis

The interim financial statements have been prepared on a going concern basis. In adopting the going concern basis, the Board of Directors have considered the current financial position of the Group, its strategy, the market outlook, and its principal risks. The Directors have also considered the Group's current cash position and its available facilities, including the Group's Revolving Credit Facility ('RCF') committed until 6 September 2028, which may be extended by a further one year at Dunelm's request, subject to lender consent. Furthermore, cash flow forecasts have demonstrated that covenants will continue to be comfortably met even in downside scenarios such as a general economic downturn resulting in consumers switching away from spending on homewares. Following this review, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and they continue to adopt the going concern basis of accounting in preparing these interim financial statements.

4 Accounting policies

The condensed financial statements have been prepared under the historical cost convention, except for derivative financial instruments and share-based payments which are stated at their fair value.

The accounting policies adopted, as well as significant and key estimates and critical judgements applied, are consistent with those in the annual financial statements for the period ended 29 June 2024, as described in those financial statements, except as described below:

5 Revenue

The Group has one reportable segment, in accordance with IFRS 8 - Operating Segments, which is the retail of homewares in the UK and Ireland.

Customers access the Group's offer across multiple channels and often their journey involves more than one channel. Therefore, internal reporting focuses on the Group as a whole and does not identify individual segments.

6 Taxation

The taxation charge for the interim period has been calculated on the basis of the estimated effective tax rate for the full year of 25.6% (26 weeks ended 30 December 2023: 26.3%, 52 weeks ended 29 June 2024: 26.4%).

7 Dividends

The Directors have declared an interim dividend of 16.5 pence per Ordinary Share for the financial year ending 28 June 2025. This equates to an interim dividend of £33.4m. The Directors have also declared a special dividend of 35 pence per Ordinary Share for the period ending 28 June 2025 which equates to £70.8m. These dividends will be paid on 8 April 2025 to shareholders on the register at the close of business on 14 March 2025.

The interim and special dividends have not been recognised as a liability in these interim financial statements. They will be recognised in the Consolidated Statement of Changes in Equity in the period ending 28 June 2025.

8 Earnings per share

Basic earnings per share is calculated by dividing the profit for the period attributable to equity holders of the Group by the weighted average number of Ordinary Shares in issue during the period excluding ordinary shares purchased by the Group and held as treasury shares.

All amortisation and depreciation charges have been included within operating costs in the Consolidated Income Statement.

In November 2024 the Group acquired 100% shareholding in Home Focus Group a group whose principal activity is the retail of homewares textiles in Ireland. Home Focus Group trade under the "Home Focus at Hickey's" brand name.

10 Investment Property

Investment Property

£'m

Cost

In July 2024, the Group purchased a freehold tenanted retail property in an attractive location for £22.3m. We expect to convert this into a Dunelm store in the future.

All amortisation and depreciation charges have been included within operating costs in the Consolidated Income Statement.

11 Leases

Right-of-use assets included in the Consolidated Statement of Financial Position at 28 December 2024 were as follows:

Lease liabilities included in the Consolidated Statement of Financial Position at 28 December 2024 were as follows:

The discount rate applied to lease liabilities ranged between 0.9% and 6.8% (FY24 H1: 0.9% and 6.7%, FY24: 0.9% and 6.76%).

The following amounts have been recognised in the Consolidated Income Statement:

The total cash outflow for the leases in the 26 weeks ended 28 December 2024 was £29.9m (26 weeks ended 30 December 2023: £28.7m, 52 weeks ended 29 June 2024: £56.9m).

12 Inventories

Goods for resale includes a net realisable value provision of £20.3m (FY24 H1: £21.8m, FY24: £21.3m). Write-downs of inventories to net realisable value in the 26 weeks ended 28 December 2024 amounted to £11.4m (26 weeks ended 30 December 2023: £15.3, 52 weeks ended 29 June 2024: FY24 £30.7m). These were recognised as an expense during the period and were included in cost of sales in the Consolidated Income Statement.

13 Trade and other receivables

15 Financial risk management and financial instruments

Financial risk factors

The Group's activities expose it to a variety of financial risks including foreign currency risk, fair value interest rate risk, credit risk and liquidity risk. The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 29 June 2024. There have been no changes in any risk management policies since the year end.

Fair values

The fair value of the Group's financial assets and liabilities are equal to their carrying value. The fair value of foreign currency contracts are the present value of future cash flows based on the forward exchange rates at the reporting date.

Fair value hierarchy

• Level 1: quoted prices in active markets for identical assets or liabilities

All derivative financial instruments carried at fair value have been measured by a Level 2 valuation method, based on observable market data.

*unamortised debt issue costs included in other receivables as at 28 December 2024 as there is no debt at the period end

The Group has medium term bank facilities of £250.0m (FY24 H1: £250.0m; FY24: £250.0m) committed until 6 September 2028, which may be extended by a further year at Dunelm's request, subject to lender consent. This is with an associated accordion facility of £100.0m, subject to lender consent (FY24 H1: £100.0m; FY24: £100.0m). As at 28 December 2024 none of this facility was drawn down (FY24 H1: £50.0m; FY24: £79.0m). The Group also has an uncommitted overdraft facility of £10.0m.

17 Commitments & Contingent liabilities

As at 28 December 2024 the Group had entered into capital contracts amounting to £3.9m (FY24 H1: £2.2m; FY24: £1.5m).

The Group had no contingent liabilities at the period end date (FY24 H1: £nil; FY24: £nil).

18 Announcement

The Interim Results, comprising the Interim Report and Financial Statements, was approved by the Board on 11 February 2025. Copies are available from www.corporate.dunelm.com.