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Summary
- Dunelm Group reported sales of £359.1 million in Q1 FY21, which grew by 36.7% year on year.
- The digital sales share was 29.7% of the total sales in Q1 FY21.
- Domino's Pizza Group reported an 11.8% increase in the delivery orders in Q3 20.
- The government's decision of reduction in VAT in mid-July 20 further supported the earnings.
Dunelm Group PLC (LON:DNLM) and Domino's Pizza Group PLC (LON:DOM) are FTSE-250 listed consumer stocks. Shares of DNLM and DOM were down by around 3.53% and 12.53%, respectively from the last closing price (as on 15 October 2020, before the market close at 9:00 AM GMT+1). Despite reporting strong performance in the recent result update, the share price trended downward due to the macro events. FTSE-250 index was down by around 1.43%.
Dunelm Group PLC (LON:DNLM) - Opened two new retail stores in Q1 FY21
Dunelm Group PLC is a retailer of homeware in the UK. It operates 173 stores with close to 50,000 product lines. Some of the key brands of the Group are Fogarty, Made to Measure and Dorma. Dunelm Group is listed on the FTSE-250 index.
Dunelm at a glance
(Source: Group website)
Q1 FY21 Trading update (ended 26 September 2020) as reported on 15 October 2020
In Q1 FY21, the sales stood at £359.1 million, which grew by 36.7% year on year from £262.6 million in Q1 FY20. The performance was above the expectation, and it was supported by the surge in online sales and increased market share. The gross margin improved by 1% in Q1 FY21 as compared to the margin in Q1 FY20. The margin improved as fewer products were placed on the sale and following the improvement in the sourcing of the products. The digital sales share was 29.7% in the total sales in Q1 FY21, and it grew from 17.6% a year ago. Both in-store and the online demand for homeware products were healthy as people are spending more time at home.
As on 26 September 2020, Dunelm had net cash of £175.2 million. Following the robust performance in the recent period, management has decided to repay the funds it received under the job retention scheme, which is around £14.5 million all claimed in FY20. In Q1 FY21, the Group has opened two new stores in Sunderland and Clydebank, and both stores are entirely operated on renewable energy. Dunelm is also working on the digital front, and it is improving the functionality on its platform and also providing new features such as order tracking and product recommendation. The handling capacity at the warehouse and the home delivery fulfilment centre has also been increased.
FY2020 Performance Summary
(Source: Group website)
Share Price Performance Analysis
1-Year Chart as on October-15-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Dunelm Group PLC's shares were trading at GBX 1,502.00 and were down by close to 3.53% against the previous closing price (as on 15 October 2020, before the market close at 9:00 AM GMT+1). DNLM's 52-week High and Low were GBX 1,601.48 and GBX 596.50, respectively. Dunelm had a market capitalization of around £3.15 billion.
Business Outlook
The Group highlighted that the homeware market is growing and Dunelm has outperformed in it. The performance in Q1 FY21 was above the management's expectation, and business activity continues to be resilient. But the Group is cautious over the future as the restrictions related to covid-19 remain highly uncertain. Dunelm is confident of sustaining amid the pandemic headwinds given the strength of its financial position. It also expects the FY21 margins to be slightly ahead of margins achieved last year.
Domino's Pizza Group PLC (LON:DOM) - Opened five new franchisee stores
Domino's Pizza Group PLC is a UK based master franchisee of the fast-food chain Domino's Pizza. The Company has master franchise rights to own, operate and franchise Domino's stores in the UK and the Republic of Ireland. Domino's Pizza Group operates 1,143 stores in the UK and 54 stores in the Republic of Ireland. It is included on the FTSE-250 index.
Q3 20 Trading statement as reported on 15 October 2020
(Source: Group website)
The UK & Republic of Ireland (ROI) system sales grew by 18.7% year on year to £342.1 million in Q3 20. The total sales for 39 weeks ended 27 September 2020 were £971.0 million, and it was up by 8.6% year on year. The total orders grew by 11.8% year on year in Q3 20, and the reopening of the collection business supported the performance as orders surged from 0.7 million in Q2 20 to 3.2 million in Q3 20.
The government's decision over the reduction of VAT rate from 20% to 5% in mid-July provided some breather as the Group was able to pass on the cost-saving to the customers. The ordering improved as the sports events were broadcasted on the television, but the Group faced some headwinds as the demand in the university areas were weaker, and there was some competition as the other stores reopened after an ease in the nationwide lockdown. The Group opened five new franchised stores in the UK in Q3 20, and it has created around 5,000 new jobs. Domino's Pizza launched vegan pizza in September, and the response for the vegan pizza has been very encouraging.
Regional Performance in Q3 2020
The UK system sales increased by 19.6% year on year in Q3 20, and it constituted 95.1% of the total system sales. The UK system sales also benefited from the cut in the VAT rate. The online sales in the UK moved up by 35.6%. The ROI sales grew by 3.1% year on year in Q3 20, and the online sales were up by 18.0%.
Franchisee Stores
(Source: Group website)
Share Price Performance Analysis
1-Year Chart as on October-15-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Domino's Pizza Group PLC's shares were trading at GBX 325.40 and were down by close to 12.53% against the previous closing price (as on 15 October 2020, before the market close at 9:00 AM GMT+1). DOM's 52-week High and Low were GBX 378.94 and GBX 253.10, respectively. Domino's Pizza had a market capitalization of around £1.72 billion.
Business Outlook
The performance and business activity of Domino's Pizza has been firm in Q3 20, and the Group expects to post an underlying profit before tax between £93 million and £98 million in 2020. It would incur a covid-19 related cost of £2.0 million in the second half of the year. The Group is focused on the digital transformation of its business as the online sales have been immensely supportive amid the health crisis.
