Slides
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A self-funded growth plan to deliver a bigger, better and bolder Dunelm Clo Moriarty Chief Executive Officer
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Our strengthsGreat colleagues & platforms Physical and digital reach Strong customer satisfaction Loyal customers Outstanding product choice Universal appeal Our business has clear strengths...
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Our business has clear opportunities... Our opportunities c.£100m5 structural cost removal to fund reinvestment White space in c.100 locations4 New Customer Obsession mindset c.80% of most loyal customers’ home wallets still to attract2 c.25% additional space from SKU consolidation3 c.85% of UK = Infrequent Dunelm shoppers1 1 Management estimates using Barclays UK data 2 Management estimates using Barclays and Kantar UK data 3 Management estimates using external benchmarking 4 Management information using proximity to existing Dunelm and competitor locations 5 Compared to FY26 base. Before growth in volume -related costs and inflation
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Confidence to act now to capture the full potential A unique moment to accelerate Context • Growth has moderated • Competition intensifying • Macroeconomic challenges Evolving consumer behaviour • Digital shapes inspiration • Data & AI open new possibilities • Expectations keep evolving An opportunity to act with ambition • Build on market leadership • Strengths give us resilience • Sharper customer understanding
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To achieve our ambition, we need to secure a lasting place in the hearts and homes of our customers
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Our ambition is BIG More Reach More Spend More Missions More Loyal Customers More Productivity
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A self-funded plan to accelerate growth Increased Customer loyalty and spend Repeat visits and share of wallet 1 52-week statutory PBT excluding adjusting items, expressed as a percentage of total sales 2 Adjusted net operating profit after tax as a proportion of total assets excluding non -current liabilities and current lease liab ilities A return to Mid-to-high single digit sales growth LFL stores growth and digital acceleration Delivering Strong returns and cash generation Adjusted PBT margin1 c.11% c.30% ROCE2 Capturing the growth opportunity requires investment, funded by our cash generative model and structural cost savings
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Targeting customer value through insight1 Share of customer #s Share of sales Dunelm devotees: 8x annual shops; larger ticket items Big dippers: 3x annual shops; curtains, sofas, furniture Little and often: 9x annual shops; smaller missions Big debuts: 1x annual shop; quilts & pillows, curtains, rugs Now and then: 3x annual shops; bedding, cookshop, quilts and pillows One and done: 1x annual shop; campaign-driven >19m customers £1.8bn sales >60% sales c.20% customers 1 Management estimates using Barclays UK data
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Customer Obsession ‘Winning Hearts & Homes’ Become the homeware specialist with something for everyone Transform our capabilities to drive sustainable growth Deliver seamless omnichannel experiences that customers love
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Become the homeware specialist with something for everyone Ranging to win1 Building trust on affordability2 Maximising our product brands3
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Become the homeware specialist Category management discipline c.25%1 of space Can be repurposed for higher productivity categories and home missions Better use of store space Rationalising range and SKUs Ranging to win1 1Management estimates using external benchmarking
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Become the homeware specialist Building trust on affordability2 Clearer Good/Better/Best architecture Improving value perception More focused trading calendar c.9ppts outperformance from early trials of new pricing architecture
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Become the homeware specialist Simplifying product brand hierarchy Strengthening the Dunelm brand Leveraging selected third-party brands Maximising our product brands3 c.90% of sales opportunity for Dunelm owned brands over time
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Extending our reach1 Optimising our estate & platforms 2 Creating connected, engaging experiences3 Deliver seamless omnichannel experiences that customers love
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Up to 10 new stores per year c.100 new locations1 identified in attractive locations Maintaining discipline on returns GEO and social commerce readiness Extending our reach1 Deliver seamless omnichannel experiences 1 Management information using proximity to existing Dunelm and competitor locations
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Improving our stores to drive LFL sales c.25% stores planned for renewals in next two years; opportunity to raise standards Avoiding value leakage Developing existing digital assets Optimising our estate & platforms 2 Deliver seamless omnichannel experiences
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More shoppable ranges in stores c.40% more spend1 from customers shopping through the App vs ecommerce Inspiration-based shopping online Connecting experiences via the App Creating connected, engaging experiences3 1 Sales since the full launch of our App in February 2026 Deliver seamless omnichannel experiences
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Transform our capabilities to drive sustainable growth Focusing our resources1 Optimising process and productivity2 Advancing our Tech3
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Transform our capabilities Reducing organisational complexity c.8%1 reduction in central headcount actioned in Q1 Transformation and change focus Upweighting Data & Analytics Focusing our resources1 1 Salaried colleagues across support functions and distribution
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Transform our capabilities Simplifying end-to-end processes c.£100m1 removal of unproductive costs by FY29; fully reinvested in growth initiatives Driving store and Supply Chain productivity Harnessing technology e.g. RFID Optimising process and productivity2 1 Compared to FY26 base. Before growth in volume -related costs and inflation
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Transform our capabilities 30% reduction in lead times from new fitter platform in Made-to-Measure Advancing our Tech3 Investing in core systems Simplifying our architecture Leveraging strategic partnerships
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Phasing our plan: year one
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In year one… Groundwork Personalisation & Loyalty Journey Distribution Automation Opportunities Key Tech Enablers & App Enhancements Leadership & Workforce Development
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Home Spaces Inspiration Affordability Tracking Tools Further New Store Format Development Social Commerce & GEO Development In year one… Pilots
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Up to 10 new stores and up to 30 renewals Improved Supply Chain Resilience Customer Targeting & Optimised Digital Experience Productivity and Process Improvements In year one… Deliverables
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A self-funded plan to accelerate growth Increased Customer loyalty and spend Repeat visits and share of wallet 1 52-week statutory PBT excluding adjusting items, expressed as a percentage of total sales 2 Adjusted net operating profit after tax as a proportion of total assets excluding non -current liabilities and current lease liab ilities A return to Mid-to-high single digit sales growth LFL stores growth and digital acceleration Delivering Strong returns and cash generation Adjusted PBT margin1 c.11% c.30% ROCE2 Capturing the growth opportunity requires investment, funded by our cash generative model and structural cost savings
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Financial Plan Karen Witts Chief Financial Officer
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£193m 11.8% £205m 12.0% £211m 11.9% £211m 11.6% FY23 FY24 FY25 FY26 Operating leverage offset by inflation and net investment PBT (£m), PBT margin (%) Strong fundamentals continuing to drive growth, but at a slowing rate FY23 FY24 FY25 FY26 £1,825m +3.1% £1,771m +3.8% £1,706m +4.1% £1,630m +5.5% Total sales growing at low / mid single digits Total sales (£m), Total sales YoY (%) 7.3% 2.5% 3.4% 9.7% 9.8% 6.7% 4.1% 2023 2024 2025 2026 CPI NLW growth Ongoing inflationary pressures, particularly in labour costs1 CPI (%), YoY NLW (%) 1 Office for National Statistics
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Consistently strong returns on capital Despite limited operating leverage in recent years, ROCE1 has remained consistently strong: • PBT margin 11 - 12%; disciplined approach to investment returns • Relatively capex-light leading to strong cash generation • Efficient balance sheet with distribution of surplus cash; £1.7bn3 returned over the last 20 years ROCE1 of c.30% well above peer comparisons2 of c.10% Return On Capital Employed (ROCE) %, FY23-FY26 c.10% Illustrative peer benchmark 2 1 Adjusted net operating profit after tax as a proportion of total assets excluding non -current liabilities and current lease liab ilities 2 Subset of comparable retailers for their most recent financial reporting period 3 Ordinary dividends plus special distributions 32.6% 33.4% 32.4% 30.8% FY23 FY24 FY25 FY26
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3-year plan to build a bigger, better and bolder Dunelm 1Compared to FY26 base. Before growth in volume -related costs and inflation 252-week statutory profit excluding adjusting items , expressed as a percentage of total sales 3Cash and cash equivalents less total borrowings. Excludes IFRS 16 lease liabilities 4Operating 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 of right -of-use assets 5Adjusted net operating profit after tax as a proportion of total assets excluding non -current liabilities and current lease liabilities Sales Total sales growth Mid-to-high single digit New space Up to 10 new stores p/a c.100 identified locations Stores LFL + Digital YoY growth More reach, loyal customers, more missions Profit Adjusted PBT margin2 c.11% Non-recurring £30 - £40m Opex in next two years, reported as adjusting Save to invest c.£100m1 Cost removal fully reinvested for growth Capital Allocation Net debt3 : EBITDA4 Within 0.2x – 0.6x Increasing Ordinary dividend Targeting return to 1.75x – 2.25x cover Prioritise investment c.£125m Incremental capex: new and existing stores, supply chain Returns ROCE5 c.30% Efficient Balance sheet Growing Adjusted EPS
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A return to mid-high single digit sales growth c.1ppts (c.1.5ppts) c.2ppts c.1.5ppts Store-enabled LFL1 +0.8% Store-enabled LFL1 New Stores more openings Up to 10 openings per annum in attractive locations Store LFLs growing Investment in renewals of underperforming stores Digital accelerating Using technology to make shopping Dunelm easier, more relevant and more repeatable Sales growth FY26 % Pathway to mid-high single digits % 3.1% Digital +9.1% Digital growth New stores TotalStore only LFL C&C and tablet-based sales in store Home Delivery New stores TotalStore only LFL C&C and tablet-based sales in store Home Delivery 1 Year-on-year sales for all stores trading in comparable periods in the reported year and the preceding year. Includes completed in-store transactions, sales transacted through in -store tablets and Click & Collect orders.
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Self-funded investment to deliver growth c.£100m1 Operating investment £30 - £40m Non-recurring investment c.£125m Incremental capex c.£100m1 Structural cost removal Self-funding cash generation Capturing the growth opportunity requires investment, funded by our cash generative model and structural cost savings 1 Compared to FY26 base. Before growth in volume -related costs and inflation.
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c.£40m c.£35m c.£15m • Simplification • Headcount reduction actioned in Q1 • Further targeted cost reduction • Key processes identified for cross-functional solutions • Removal of manual activity and complexity • Increased use of data and automation • Technology targeted on efficiencies • RFID early roll-out underway • Improving workforce management systems Removal of least productive costs Organisational design & cost removal End-to-end process re-engineering Operating model optimisation c.£100m1 vs FY26 base by FY29 1 Compared to FY26 base. Before growth in volume -related costs and inflation c.£10m• Reducing range complexity • Improving inventory discipline Range efficiency & rationalisation
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c.£100m1 vs FY26 base Opex by FY29 £30m - £40m Total adjusting items FY27 – FY28 c.£125m Incremental capex FY27 – FY29 • Technology – SaaS partnerships • Larger store estate • Capability • Restructuring costs • Foundational technology • Change programme delivery • New store expansion • Underperforming stores • Stores of the future • Supply chain infrastructure Investment for profitable and sustainable growth P&L Incremental and recurring P&L non-recurring / adjusting items Capex 1 Compared to FY26 base. Before growth in volume -related costs and inflation
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FY23 - FY26 FY27 FY28 FY29 New stores Existing stores Tech Supply Chain Investment to enhance the customer experience across stores & supply chain Incremental c.£125m capex FY27 - FY29 Disciplined approach to returns: • New store paybacks c.4 years • Renewals targeted to pay back within c.3 years • Supply Chain investment subject to ongoing discovery £60m - £70m £43m
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Sustained strong returns Investing for long-term value whilst maintaining attractive returns • Building a leaner and more effective business for the long-term • Favourable returns vs sector comparatives • Slight moderation during period of transition • Adjusted PBT margin1 c.11% • Strong ROCE2 continues at c.30% • Expansion expected beyond the plan period c.10% 30% Illustrative peer benchmark 3 Return On Capital Employed (ROCE) 2 c.6% Illustrative peer benchmark 3 Adjusted PBT Margin1 1 52-week statutory PBT excluding adjusting items, expressed as a percentage of total sales 2 Adjusted net operating profit after tax as a proportion of total assets excluding non -current liabilities and current lease liab ilities 3 Subset of comparable retailers for their most recent financial reporting period 11% FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY23 FY24 FY25 FY26 FY27 FY28 FY29
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Clear priorities for capital allocation Increasing in this plan to capture growth opportunity Investment in the business for growth Continues given strong cash generation and confidence in the business Surplus cash returned to shareholders via buybacks or special dividends Growing Ordinary Dividend Surplus cash returned to shareholders
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FY27 guidance 1 52-week statutory PBT excluding adjusting items 2 Cash and cash equivalents less total borrowings. Excludes IFRS 16 lease liabilities 3 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 of right-of-use assets Inflation of c.3% on FY26 operating cost base Cost removal of £25m - £30m to fund a similar amount of reinvestment for growth Adjusting items £30 - £40m in total across the next two years; relating to restructuring and systems investment. Largely non-recurring cash items Adjusted PBT1 broadly in line with the prior year Effective tax rate 50 – 100bps above headline rate Working capital broadly neutral across the year; HY timing benefit of c.£90m Capex of £60m - £70m: • Up to 10 new store openings • Up to 30 renewals focused on underperforming stores; plus continued programme of refits Net debt2 to remain within targeted range of 0.2x – 0.6x EBITDA3 For FY27 we expect: FY27 will be a 53-week year. Income statement guidance is provided on a 52-week basis
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3-year plan to build a bigger, better and bolder Dunelm 152-week statutory profit excluding adjusting items, expressed as a percentage of total sales 2Adjusted net operating profit after tax as a proportion of total assets excluding non -current liabilities and current lease liab ilities Sales Profit Returns Capital Allocation Total sales growth Mid-to-high single digit Adjusted PBT margin1 c.11% ROCE2 c.30% Net debt : EBITDA Within 0.2x – 0.6x Transform our capabilities Deliver seamless omnichannel experiences Customer Obsession ‘Winning Hearts & Homes’ Become the homeware specialist